RAY GRABANSKI COLUMN: Market prices retreat
Wheat Wheat closed for the day July 14 sharply lower because of a lack of fresh news and with spillover from corn pressuring prices lower. In addition, the winter wheat harvest continues to progress limiting any upside potential. The winter wheat...
Wheat closed for the day July 14 sharply lower because of a lack of fresh news and with spillover from corn pressuring prices lower. In addition, the winter wheat harvest continues to progress limiting any upside potential. The winter wheat harvest is supposed to produce a large crop, which was evident from the USDA report July 11 that expanded its expectations for soft red winter and hard red winter wheat production from last month's reports. In addition to the large U.S. crop, world wide wheat is suppose to have a bearish year with an exceptional crop expected.
The market finished moderately lower July 15 as spillover from corn pressured wheat prices. On a larger scale, commodities in general were bearishly affected by broad economic concerns. These stemmed from this mornings press conference and led to crude oil plummeting $9. This pushed commodities lower for the day. Minneapolis Grain Exchange wheat received some support from concerns over the condition of the spring wheat crop. In the July 14 crop progress report, spring wheat conditions dropped 8 percent in the good to excellent category. This is result of the recent dry and hot weather conditions, which is concerning traders. However, these conditions could turn around with a good rainfall. Also there is a possibility for some export business with Egypt, which is supported by the lower U.S. dollar, which also provided some underlying support.
Wheat finished the day July 16 sharply higher, making a recovery after a bearish morning. Early on, wheat moved sharply lower, following the trend of other commodities after a bearish energy report and continuing economic concerns. By midday, though, the market turned bullish with speculation that losses were overdone. Wheat had been moving bearish for days and needed a bounce. Also, wheat is continuing in its role as a follower, primarily of corn, and with other grains moving sharply bullish, wheat followed suit. Technical buying also stepped in to added to gains. Despite the sharp recovery, the fundamentals for wheat still look bearish with a progressing winter wheat harvest and with rains expected in the Northern Plains, which is bearish for spring wheat.
Wheat closed sharply lower July 17, following the trend of other commodities. With a lack of fresh bullish news, weak outside markets and a lack of follow-through buying from the July 16 gains, wheat fell sharply lower. Without fresh influences, wheat looked to its bearish fundamentals as the winter wheat harvest continues to progress. Also globally, the wheat crop continues to progress favorably with good growing conditions, which isn't adding any support to the market.
Export inspections were at 11.9 million bushels, which wasn't enough to meet the 18.9 million bushels needed to stay on pace for the marketing year. Primary destinations were Egypt and Philippines. Export sales were above expectations at 27.5 million bushels. This is with preliminary expectations of 14.7 million to 23.9 million bushels.
Corn started the week sharply lower on favorable weather forecast and without support from outside markets. Corn opened lower from the overnight and held that trend for the day. With little fresh fundamental news, corn is looking bearishly at the favorable weather conditions. Any damage from June's wet weather has been forgotten and with the forecast for dry warm weather there is little to look at to support prices. In addition lower crude oil and a stronger U.S. dollar are adding to the bearish trend.
Corn sharply closed lower July 15 on economic concerns and a lack of fresh fundamental news. Corn followed the theme of the day with bearish economic concerns pressure commodities across the board. A morning press conference led to concerns about the deflation of the economy, which in turn produced a $9 drop in crude oil. This economic uncertainty spilled over into commodities and left them moving lower for the day. In addition, weather conditions remain favorable and crop conditions improved, as evident in the July 14 crop progress report. This should keep corn moving lower, though the market will remain sensitive to changing weather conditions.
Corn opened lower July 16 and fell sharply lower through the morning on a bearish energy report. This, in addition to continued economic concerns, kept corn moving bearish until around midday, when corn began to recover as traders thought loses were overdone. In addition, technical support stepped into to allow corn to climb to sharply bullish. Weather also is playing a supportive role with concerns about long-range forecast of hot dry weather. This could add stress to the crop and negatively effect crop conditions.
Corn finished lower July 17 because of pressure spillover from bearish soybeans. Adding to the downward trend was a lack of strength in the outside markets and no fresh news to pull the market upward. Fundamentally, we are moving into a seasonally bearish time, and weather conditions continue to look favorable which isn't helping to add strength to the market.
Soybeans started the week closing sharply lower with the market removing some of the premium from the week before. The July 11 USDA reports were bullish for soybeans, but weather conditions continue to look favorable pushing the market lower.
Soybeans opened July 15 bullish on concerns over crop progress but later were pressured by bearish outside markets. Concerns over the progress and condition of the soybean crop were supporting gains, with the July 14 crop progress report showing conditions holding steady and only at 26 percent blooming. However, this upward movement was short lived as economic concerns moved in to pressure prices. A morning press conference led to concerns about the status of the economy, which carried over into causing crude oil to drop $9. This brought broad based pressure on commodities, which pressured soybeans into falling sharply lower for the day. Additional, weather conditions continue to add pressure to prices.
Soybeans moved lower through the morning July 16, following the other commodities. Pressure came from a bearish energy report, lower crude oil, and continuing economic concerns. But with sharp losses July 15 and through the morning, there were thoughts that losses had been overdone. This allowed the market to focus back on the bullish fundamentals, which allowed soybeans to turn sharply higher for the day.
Soybeans finished sharply lower July 17 on news from Argentina, in which the government did not pass an export tax. This will allow more soybeans to enter the global market pressuring U.S. soybean prices. In addition, there was a lack of any fresh fundamentals with export sales and outside markets unable to lend any support. Also, weather conditions continue to look favorable, adding to price pressures.
Export inspections were at 11.9 million bushels, which wasn't enough to meet the 18.9 million bushels needed to stay on pace for the marketing year. Primary destinations were Egypt and the Philippines. Export sales were below expectations of 6.4 million to 18.4 million bushels with the total sales reported at 3.8 million bushels. However, this is enough to stay ahead of pace for the year. While meeting projection isn't far away, there is some concern as there still is the chance of cancellations.
USDA reported no barley shipments for the second week of July. This brings the year-to-date shipments total for barley to 1.04 million bushels compared with 646 million for last year at this time. USDA estimated last week's barley export sales pace at 200,000 bushels with Canada, Taiwan and Mexico the major destinations. This brings the year-to-date total barley export sales estimate to 4.3 million bushels compared with 5.5 million bushels for last year at this time. USDA is estimating this year's barley export sales pace to be 25 million bushels. As of July 13, 78 percent of the nation's barley was headed compared with 58 percent for the week before and 84 percent for the five-year average. Barley's crop condition rating declined 2 percent to 67 percent good to excellent, 26 percent fair and 7 percent poor to very poor. The biggest decline came in Montana and North Dakota, where hot and dry conditions continue to affect crop potential.
There was no durum shipments reported for last week. As of July 13, 72 percent of North Dakota's durum was heading compared with 36 percent the week before and 57 percent for the five-year average. Six percent of the states durum crop is turning compared with none last week and 4 percent for the five-year average. North Dakota's durum crop condition rating declined 22 percent the week before to now be rated at 29 percent good (no excellent), 46 percent fair and 25 percent poor to very poor. The hot and dry weather continues to take its toll on the durum crop in the western regions of the state.
Canola futures on the Winnipeg, Manitoba, exchange closed lower to sharply lower for the week. The selling pressure was a result of spillover selling from a sharply lower U.S. soybean complex. Additional selling was a result of good growing conditions across much of the major canola-growing regions. Some areas are starting to report dry conditions, but it is not critical as of yet.
As of July 13, North Dakota's sunflower crop was 2 percent in bloom compared with 1 percent the week before and 2 percent for the five-year average. North Dakota's sunflower crop condition rating improved 2 percent to now be rated at 65 percent good to excellent, 31 percent fair and 4 percent poor to very poor.