Wheat
The wheat market started the session off lower for the week with most of the early selling pressure coming from harvest pressure as well as from a slowdown in demand. Both of the week's export reports were bearish to wheat as it both had numbers that were in the low end of the trade estimates. It does appear that the higher price grain is finally starting to affect demand, at least export demand. From there, the wheat market started the session mixed, but the rest of the week saw decent gains come to the wheat. Not even a lower corn or soybean complex could pull the wheat market lower June 24, though it did try on more than one occasion. Early buying was a result of June 23's crop progress report, which showed a 1 percent decline in winter wheat's crop condition rating. The buying then was spurred on by disease concerns in the winter wheat. Harvest activity has been slowed down due to the wet conditions, and now producers are starting to notice more disease pressure showing up in the wheat.
So far, early harvest results have shown an excellent crop out in the fields, but at this rate, the quality of the crop is going to decline fast. The weather forecast has some light showers for the Delta and Southern Plains, so maybe the harvest activity can be started again.
Other news to hit the wheat market came from Australia. The Australian Wheat Board no longer will be the only entity allowed to export wheat out of Australia added selling pressure to the wheat as well.
Also on the world front, India officials now are looking at the potential chance of exporting wheat out of that country because of a larger-than-expected crop.
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USDA will release its prospective planted acreage report June 30. So far, the average trade estimates has spring wheat planted acreage at 14.321 million acres compared with 14.333 million acres for the March report and 13.297 million acres for last year. All wheat acres are estimated at 63.818 million compared with 63.8 for March and 60.4 million for last year.
USDA estimated last week's export sales pace at a combined old and new crop at 18.5 MB. This brings the year-to-date export sales pace for the year to 315.3 million bushels compared with 217.1 million for last year at this time. USDA export inspections report estimated last week's wheat shipments for last week at 17.7 million bushels compared with 15.6 million bushels for last week. This brings the year-to-date wheat shipments pace to 50.1 million bushels compared with 42.9 million bushels for last year at this time.
USDA is estimating the winter wheat crop as 95 percent headed compared with 89 percent for last week and 97 percent for the five-year average. This will be the last week USDA will rate the heading status for the winter wheat crop. Twenty-two percent of the winter wheat crop is harvested compared with 16 percent for last week and 32 percent for the five-year average. The winter wheat crop condition rating slipped 1 percent to now be estimated at 46 percent good/excellent, 31 percent fair and 24 percent poor/very poor. Ten percent of the nation's spring wheat crop is headed compared with 2 percent for last week and 24 percent for the five-year average.
All states are lagging behind in progress. The nation's spring wheat crop is rated at 72 percent good/excellent, 23 percent fair and 5 percent poor/very poor and an improvement of 5 percent for the week.
Corn
Corn prices rallied to new highs this week, with December corn running above the $7.91 previous high by Thursday, and closing 30 cents higher for the week. While much ado has been made about the flooding problems in Iowa, Wisconsin, Illinois and Missouri -- it might actually be the crude oil prices that is the most bullish factor in corn. Make no mistake, these 4 states do have major problems and obstacles to getting a normal crop this year. There likely were corn acres drowned out that will be replanted to soybeans, and even some of those acres may not produce much of a crop this year.
But Pro Ag yield models based on crop conditions are not much below average "trend" yields in corn. This weeks crop conditions improved 2 percent in the good/excellent category to 59 percent good/excellent, well below last year's 70 percent rating at this time. But Pro Ag yield models increased. The corn is not off to a good start, but a few more week's improvement like the most recent week (a 2-bushel hike), and we will be back to near normal.
The real driver of the recent bull run taking us to new highs this week was crude oil, as energy markets also rallied to new highs this week at $142 a barrel. Pro Ag believes crude oil could run to $159 a barrel this year, so there could be an additional rally on the way for grains if crude goes higher. But for the most part, grains are high enough to allocate a short supply of grain. If not for rallying energy markets, Pro Ag doubts corn prices would be anywhere close to $8.
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Soybeans
Soybean prices ran to new highs, keeping this commodity in the same category as crude oil and corn (new highs for all three this week). While crude oil gained about 6 percent for the week, soybeans only gained 50 cents or about 3.3 percent, so it didn't really keep pace with the corn and crude oil. But then again, bean oil is only about half the value of the soybeans, and only bean oil prices are directly tied to energy via biodiesel use.
From a cropping standpoint, U.S. soybeans are off to a bit of a rocky start, with Pro Ag yield models June 23 about unchanged for the week. While crop conditions improved 1 perent in the good/excellent category, Pro Ag yield models were virtually unchanged. We think the crop probably improved again this week, though with warming temperatures and less than normal rainfall across the soggy Corn Belt. It probably allowed most areas to complete their 2008 soybean planting (except for double cropped acres).
Since soybeans ran to new highs again, we may blast higher during the coming five to 10 trading days and hopefully gain $1 to $3 in a very short period of time with straight-up-type trade. This is exactly the way a market will trade during a blow-off top. Since crude oil ran higher though, it's likely we haven't completed the blow-off top yet.
Barley
USDA estimated last week's barley export sales pace at 300 metric tons with Taiwan the only destination. Cash barley bids have remained unchanged for the past few months as everyone keeps an eye on the crop development and condition of the crop. So far, the growing conditions have been just short of ideal and it appears that the crop potential will be good for barley. USDA estimated no barley shipments for last week. This brings the year-to-date total shipments for barley to 750,000 bushels compared to 536,000 bushels for last year at this time. USDA is reporting 11 percent of the nation barley is now in the heading stage compared with 2 percent for last week and 22 percent for the five-year average. The nation's barley crop improved 5 percent to now be estimated at 74 percent good/excellent, 22 percent fair and 4 percent poor/very poor.
Durum
USDA estimated last week's durum export sales pace at 100,000 bushels. This brings the year-to-date export sales total for durum to 9.1 million bushels compared with 8.7 million bushels for last year at this time. As is the case in the barley, crop conditions have been very good, and so far, conditions just keep on improving. There was no durum shipments reported for last week. North Dakota's durum crop is estimated to be 53 percent in the jointing stage compared to 36 percent for last week and 49 percent for the five-year average. Two percent of the states durum has headed compared with none last week and 6 percent for the five year average. The states crop condition rating is estimated at 67 percent good/excellent, 32 percent fair and 1 percent poor/very poor. An improvement of 7 percent from last week.
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Canola
The canola market put in a decent week, mainly because of strength seen in the U.S. soybean complex. The strength in the crude oil market added to the support. It seems that most of the vegetable oil markets are following the crude oil exchange rather than looking at thee own fundamental news. Canola did get some negative news when Statistics Canada released its latest look at the potential planted acreage estimate for canola. Statistics Canada is estimating a large increase in canola acreage, but the market only looked at the numbers for a brief moment before staring other news of the day. North Dakota producers' canola crop is 4 percent in bloom compared with none last week and 24 percent for the five-year average. North Dakota's crop is rated at 65 percent good/excellent, 30 percent fair and 5 percent poor/very poor and an improvement of 3 percent from last week. Minnesota's canola crop is rated at 46 percent good/excellent, 37 percent fair and 17 percent poor/very poor. Cash canola bids in Velva, N.D., ended the week at $28.70 for old crop while new crop bids ended at $28.02.
Sunflowers
USDA is estimating sunflower planted progress at 91 percent complete compared with 77 percent for last week and 92 percent for the five-year average. The only states that are lagging behind in planting progress are Colorado and Kansas. Cash sunflower bids in Fargo, N.D., ended the week at $30.60 for old crop and $29 for new crop.
