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Report spurs profit taking

Wheat Wheat started out the week sharply lower, falling to three-week lows. Bearish pressure came from a stronger U.S. dollar, which triggered fund selling. U.S. wheat was seen to be overpriced in the world market, and selling was needed to make ...

Wheat

Wheat started out the week sharply lower, falling to three-week lows. Bearish pressure came from a stronger U.S. dollar, which triggered fund selling. U.S. wheat was seen to be overpriced in the world market, and selling was needed to make prices more competitive. Adding to the pressure, winter wheat harvest continues to make progress in the Southern states. The June 8 crop progress report showed that spring wheat planting has gained ground and concern about planting is subsiding, removing support from the market.

Wheat closed sharply higher June 9, gaining back losses from the June 5 and 8 sessions. The upward momentum is attributed to the increased fund buying, with fund buying accounting for more than 4,000 contracts on the Chicago Board of Trade. Outside markets are lent a hand with the U.S. dollar moving lower and crude oil moving higher.

The June USDA reports released June 10 were neutral to bearish for wheat, but still didn't provide any fundamentals to move the market. With the other grains moving lower, wheat fell on spillover and profit taking after gains earlier in the week.

The USDA World Agricultural Supply and Demand report showed a reduction in wheat supply for 2009 to '10 because of a 10 million-bushel reduction in the forecast U.S. winter wheat crop. However, feed and residual use also was lowered, so ending stock came out 10 million bushels higher to 647 million bushels. Other than the change in winter wheat production estimates, production remained unchanged from May. Global supply was lowered 1.6 metric tons, but consumption, imports and exports also were lowered.

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Wheat closed mixed June 11 after a volatile trading day, with the winter wheat markets seeing slight to modest losses and spring wheat up moderately higher. Starting out of the overnight, wheat was moving bullish along with the other grains. By midday, the Kansas City Board of Trade lost steam and fell bearish and the CBOT followed shortly. Gains were trimmed on the Minneapolis Grain Exchange, but because of late planting concerns, moderate gains were able to be kept.

As of June 7, the USDA crop progress report estimated spring wheat planting progress at 96 percent complete compared with 89 percent for last week and 100 percent for the five-year average. The states that are lagging behind in progress continue to be North Dakota and Minnesota, though both states have made progress in the past week to be 94 percent planted.

Corn

Corn futures were lower by about 10 cents compared with the June 5 close. Corn traded lower June 1, 3 and 5 and higher June 2 and 4. Whatever the outside markets did those days, corn followed them. The reports that came out this week were within the estimates, so that did little to influence the corn market. The corn market had little of its own fundamental news to make a move.

The market started the week lower and ended at near session lows with 9.25- to 9.5-cent losses. The corn market followed the soybean and wheat markets to open lower and then trended lower throughout the session. The corn also was influenced by the weakness in the outside markets, a lower Dow and crude market and a stronger dollar. The weekly export inspection numbers also were viewed as bearish. The inspections came in at 26 million bushels with the estimates at 35 million to 40 million bushels. The crop progress report released June 8 stated that 97 percent of the corn has been planted. The two states that we have been paying attention to are Illinois and Indiana, which came in at 93 percent and 90 percent, respectively.

Midweek the news was USDA's crop production report. The report was seen as friendly to bullish for the corn market, but traders said that it came in at pre-report estimates and that already was built in, so the corn traded lower on the strength of the dollar. USDA reduced the estimated yield by 2 bushels to 153.4 bushels an acre vs. 155.4 bushels an acre last month, lowering projected corn production by 155 million bushels to 11.9 billion bushels. This also reduced new crop ending stocks by 55 million bushels to 1.09 billion bushels. USDA did not change old crop ending stocks, leaving it at 1.6 billion bushels. There was no adjustment made to the acres planted as that number will come out June 30. With a reduction made to the yield and the problems that the eastern Corn Belt has had, one would assume that the planted acres also will have to be adjusted.

To end the week, we saw the market close with losses, again being influenced by the outside markets. We also saw some profit taking and positioning before the weekend. We have found good support on the breaks and the trend remains up. The corn market is being further supported by the wet cool weather in the eastern Corn Belt. This market will watch the condition of this areas crop for the next few weeks as there are replanting and germination issues. This should be supportive for new crop prices and the next few weeks of trading will be interesting.

Soybeans

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Soybeans finished the June 8 session mostly lower on bearish outside news. However, the July front month found new highs on concerns over tight old crop ending stocks. The USDA June 10 crop report was expected to show tighter old crop ending stocks, which would continue to provide support to front-month contracts. The rest of the market was pressured by a higher U.S. dollar and lower crude oil and equities. The crop progress report showed planting and emergence progressing, though still well below the five-year average. Crop concerns could continue to provide underlying support to the market.

Soybeans ended the June 9 session sharply higher as the market positions ahead of the USDA reports that were expected to be bullish for soybeans.

The market started June 10 with a bullish outlook after a bullish morning report, but with this news already built into the market after the past couple of day's gains, the market turned bearish. Fundamentals continue to provide support for the front month, and new crop received some underlying support as well. Overall, it was just a day of profit taking in grains. With the release of the June reports, grains were moving lower across the board.

The USDA reports were bullish for soybeans with USDA cutting ending stocks based on lowered exports from Argentina. Argentina's exports were lowered 2 million tons to 5.4 million tons, the lowest in nine years. Ending stocks for 2008 to '09 were lowered 20 million bushels from last month to 110 million bushels. Ending stocks for 2009 to '10 also were lowered to 210 million bushels, which is 20 million bushels lower than last month. U.S. soybean crush was raised to meet growing soybean meal exports. Production for the U.S. was unchanged from last month, so bullish news came from the increased exports for the U.S. and increases in crush estimates.

Soybeans started June 11 with strong gains and were able to keep strong gains for the day with support from old crop concerns and a rally in soymeal. Soymeal's sharp rally helped soybeans keep their sharp gains for the day, even after other grains fell near the close. Old crop months continue to get support, especially after the June 10 report, which cut production in Argentina further. Export sales were bearish, though since soybeans already have met USDA projections for the year, this has had little influence on the market.

Barley

USDA reported no barley shipments for last week. To date, there has been no barley shipped out of U.S. ports. This compares with 755,000 bushels being shipped by this time last year. USDA estimated last week's barley export sales pace at 1 million bushels, with the sale being carried over from last year. This brings the year-to-date export sales pace for barley to 1 million bushels compared with 3.2 million bushels for last year at this time.

USDA only made one adjustment to barley's supply and demand numbers, a 1 million-bushel cut in 2008 to '09 export pace.

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Durum

USDA reported no durum shipments for last week. USDA estimated last week's durum export sales pace at 100,000 bushels. This brings the year-to-date export sales pace for durum to 6.8 million bushels (carried over from last year) compared with 8.9 million bushels for last year at this time.

North Dakota producers have 96 percent of the states durum planted as of June 7. This compares with 85 percent for last week and 93 percent for the five-year average.

Canola

Canola futures on the Winnipeg, Manitoba, futures exchange was on track to end the week mostly steady (for the week ending June 11). The canola market was in a tug of war behind between the lower performing soybean complex and the higher U.S. energy complex. A stronger Canadian dollar was the main reason for the lackluster weekly performance. Losses were limited by production concerns because of poor emergence of the crop and from spillover strength from the higher U.S. soybean and energy complex. The past few weeks of cold weather has affected canola's emergence.

As of June 7, North Dakota producers had 88 percent of the states canola planted. This compares with 69 percent for last week and 98 percent for the five-year average. Emergence was estimated at 50 percent compared with 28 percent for last week and 89 percent for the five-year average.

Sunflowers

As of June 7, 55 percent of the nation's sunflower crop was planted compared with 31 percent for last week and 63 percent for the five-year average.

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