Market instability continues

Wheat For the week the winter wheat contracts will close with roughly 10 to 15 cents of pressure while Minneapolis will close steady. Progressive Ag is sold out of 2008 wheat but has not yet made any sales of the 2009 or beyond production years. ...


For the week the winter wheat contracts will close with roughly 10 to 15 cents of pressure while Minneapolis will close steady. Progressive Ag is sold out of 2008 wheat but has not yet made any sales of the 2009 or beyond production years.

The wheat market started the week sharply higher with most of the early strength coming from spillover strength from the other grains, but mostly from technical buying. The strength was mostly spurred on by fund buying. The funds have been aggressive sellers of the grains the past few weeks, so to see them return to the wheat market was encouraging. The wheat market did come under light selling around midsession with most of the pull back tied to a poor export inspections estimate. The strong dollar has taken a toll on the wheat export pace the past few months that that has been very evident in the shipments pace. But the trade seemed to disregard the fundamental news and just concentrated on the technical side of the market. And with wheat in an oversold market condition, a rally of some sort was bound to occur.

The wheat market started Nov. 4's session off higher with most of the early support coming from it being Election Day. The market does not like uncertainty and that is about to end, at least as far as who the next president will be. This helped to bring support to all of the commodities as well as to the financial markets. Additional support was a result of spillover strength from a higher session in the other grains. Both corn and soybeans were higher, and that helped to bring the funds in to be buyers in the wheat market. Gains were trimmed late in the session as wheat does not have any major news of its own to help support the market. Basis levels are improving and Minneapolis still is inverted, which means there is a short-term need for wheat, but this is season demand spurt that almost always occurs for Minneapolis wheat at this time of year. The only positive wheat has going is that the dollar is losing value.

The wheat market has staged a fairly decent technical rally the past week, but Nov. 5's activity was more focused on the lack of news and wheat turning back into a follower instead of a leader. The wheat market did not have any news of its own to go on, so it took the path of least resistance and sold off, following the corn and soybean complex. There was news out of Australia that should have helped to limit session losses, but it seemed the market was not interested in anythingbut selling pressure. The Australian government cut the potential size of that countries wheat crop to 19.9 million metric tons, an 11 percent decline from the last estimate it had put out. But the trade took this as no new news and kept the selling pressure in place. The funds turned to be sellers as they dumped more than 2,000 contracts (Chicago Board of Trade).


By Nov. 6, the wheat market came under pressure early with most of the selling tied to spillover selling from the other grains (both corn and soybeans were lower) as well as from the financial markets (which started lower and extended losses throughout the session). A sharply lower energy sector also added pressure. Fund selling continues to be the main focus of trader's attentions. A stronger U.S. dollar continues to be the single largest pressure point for wheat as it makes our wheat more expensive and less attractive to foreign buyers.


To begin the week, corn closed slightly higher in anticipation of the next day's elections.

Corn managed to stay a float as crude oil and the U.S. dollar kept the gains limited. Crude oil has continued to drop even after last's week cut in production. Corn needs to keep its distance from crude oil and the dollar for now like we saw in today's market. Since we have tied commodities to fuel, it is hard to find fundamentals to influence the market.

Corn finished the Nov. 4 trading day higher with big support from outside markets from a big rally in the crude market and the weakening in the dollar today. The Dow also had one of its biggest Election Day gains that were friendly to commodity prices.

Midweek saw corn close sharply lower. The market acted as it should after Election Day. Crude oil also was sharply down and that has brought corn down as well. The Dow lost ground after some stability in the market last week. These outside markets have been pushing down corn from some time. It appears that the nice weather for harvest will come to an end soon. Rain and snow could continue to keep farmers out of the field. That should help to limit the potential size of the selloff.

Corn closed down Nov. 6 because of the liquidation that took prices lower as economic fears continued. Nov. 5 was one of the heaviest days of trading volume in the last month and a half, but Nov. 6 did not match it in terms of selling pressure. With the corn harvest midway in many areas and with heavy rains and snow forecast for the remainder of the week in the northern areas, a huge damper will be put on harvest progress. This progress is needed to get good-quality corn for production.

Corn for the week thus far has lost 17½ cents before the Nov. 6 close, the loss largely because of harvest lows. We have extra supply in the market that comes from producers who don't have the capacity to store grain. As reported by USDA, there is still 45 percent of corn left to get off the field. Getting this corn off the field is a major priority to keep ending stock at the estimated levels.



To start the week, soybeans finished slightly higher as harvest is slowly wrapping up. Many were waiting to see what would happen in the market during elections. There were some increases in the export market that could give the market a bounce. Also, it appears that many farmers are holding there soybeans and prices need to become more aggressive.

Soybeans finished on the positive side Nov. 4. Soybeans were helped by impressive gains in crude oil and also the edible oil markets seem to have seen their bottom and are starting to experience a resurgence of long futures buying interest. Soybean harvest is wrapping up across the Midwest with a nice stretch of dry weather the past week. Any other soybeans left will have a tough time being taken with an unfavorable forecast in store for the remainder of the week for the area. Soybean yields continue to show mixed results with many farmers reporting yields that were less than expected.

By midweek, soybean closed sharply lower. The pressure was enough that that soybeans closed near the bottom of the market. Soybeans had a rough day as the U.S. dollar shows impeccable strength. Crude oil also took its toll on soybean price Nov. 5. These outside markets have been pushing the markets around as we wait for some type of fresh fundamentals to carry this market. As we wait to see what will happen with the remaining 14 percent of soybeans left out in the field rain and snow could hinder any progress.

Soybeans finished Nov. 6 with slight gains in the market. The outside markets like crude oil and equities experienced heavy losses as traders continued to have fears of a worldwide recession. The support that kept soybeans higher throughout the day came from fundamentals. The overall picture for soybeans still is bears after all of the most recent news of production. Soybean harvest is close to finishing up across much of the region and with wet weather in the forecast for the end of the week many farmers may not be able to get to the beans they have left because of wet conditions in many fields.

For the week, soybeans had lost about 16 cents for the week before the Nov. 7 close. Soybean harvest has been very slow and could continue to be. The regions that have soybeans left to harvest have been receiving less-than-desirable weather for harvest. This leaves about 14 percent of the crop left to harvest. If this 14 percent doesn't to get harvested, this could be a pinch on the ending stocks. This would be supportive of higher prices because of the reduction in supply. It will be interesting to see what type of progress will be seen in the Nov. 10 National Agricultural Statistics Service report under the harvest column.


No barley was shipped out of U.S. ports last week. This brings the year-to-date shipments total for barley to 7.7 million bushels compared with 15.5 million bushels for last year at this time. USDA reported no barley sales for last week. This brings the year-to-date export sales pace for barley to 9.8 million bushels compared with 39.7 million bushels for last year at this time. Cash barley bids in Minneapolis have remained unchanged with feed barley bids at $3.15, while malting barley continues to have no quote.



USDA estimated last week's durum shipments at 157,000 bushels with the entire amount going to Italy. USDA put last week's durum export sales pace at 300,000 bushels. This brings the year-to-date durum export sales pace to 11.3 million bushels compared with 31.9 million bushels for last year at this time.


The Winnipeg, Manitoba, canola futures market closed higher for the week with contracts posting between $8 to $11 (Canadian) of strength for the week. Strength from the U.S. soybean complex helped the canola market, but the U.S. soybean market also caused part of the week's gains in the canola market to dissolve. Most of the late session strength was a result of carry-over support from a stronger vegetable oil market worldwide. Domestic demand for canola is starting to pick up and it is helping to offset some of the slowdown from the slow export market. The gains were kept in check by the lack of new export demand.


As of Nov. 2, 51 percent of the nations sunflower crop had been harvested. This compares to 22 percent for last week and 69 percent for the five-year average. The Nov. 6 cash sunflower bids in Fargo, N.D., were at $15.80.

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