Wheat
Despite bullish export reports, the wheat market was pressured lower for the week by large gains in the U.S. dollar, lower row crop markets and rain in the Southern Plains of the U.S. In the nearby contracts, for the week, Chicago wheat was down 18.25 cents to $5.3875, Minneapolis was down 15.25 cents to $6.4175, and Kansas City was down 12 cents to $5.745.
The wheat market carried over gains from the overnight session Feb. 9 and built on them during the first couple hours of trading. The early support came from a sharply higher soybean market, lower U.S. dollar and bullish export report. USDA released its weekly export inspection report, which showed wheat exports of 19.1 million bushels the week before. This is 4.1 million bushels above what wheat needed to stay on pace with USDA's annual projection of 1 billion bushels. Around midday, traders began position squaring ahead of USDA's supply-demand report to be released Feb. 10. Choppy trade in the corn and soybean markets ensued and soybeans fell nearly 20 cents off of their highs which pressured the wheat market lower the rest of the session. Wheat did hold on to gains of 8 to 10 cents in Chicago and Kansas City and 3 to 11 cents in Minneapolis.
The wheat market opened lower than expected Feb. 10 after posting gains in the overnight session. An early sell-off in the grain markets after the release of the supply-demand report saw wheat contracts trade with losses of more than 20 cents in the opening hour of the session. USDA's monthly supply-demand report left the wheat market without any new direction as carry-out estimates remained nearly the same going from 650 million bushels on the last report to 655 million bushels. Without news of its own, the wheat market was left to follow soybeans, which made a run higher around midday but hit resistance late and dropped lower into the close. During its midday rally, wheat neared unchanged but faded to 4 to 10 cent losses by the close in all three exchanges. The early pressure in the market was mostly a result of the abundance of sell orders placed before the open by traders expecting a negative report. The market recovered from the sell-off as the bullishness of the report started to take hold, but any rally was held in check by a higher U.S. dollar and sharply lower stock market.
After opening lower Feb. 11, the wheat market rallied higher to near unchanged but ran into selling pressure only a few minutes into the day and was unable to find any strength during the remainder of the session, eventually adding to its losses in the final hour of trade. Nearby contracts in all three exchanges closed 11 to 13 cents lower. Pressure came from lower row crop markets and a higher U.S. dollar, in addition to the large carry-out estimate of 655 million bushels that is looming over the wheat market. Rain in the Southern Plains earlier in the week was negative for wheat, but more moisture still is needed before that winter wheat crop starts to make any significant recovery. The Chinese winter wheat crop also is facing drought concerns which have been supportive for the wheat recently. China's drought may be worse than reported because their government has begun to implement a plan to irrigate 1.5 million acres of wheat.
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The wheat market got off to another promising start Feb. 12, but like the last few sessions, was unable maintain strength for the duration of the session.
The USDA export inspection report for last week showed shipment of 19.1 million bushels of wheat, which was above the 15 million bushels needed to stay on pace. USDA estimates total wheat shipments for the year to reach 1 billion bushels, currently shipments for this marketing year stand at 745 million bushels, compared with 907 million bushels a year ago. Exports sales reported Feb. 12 came in at 15.1 million bushels, which was 5.4 million bushels more than needed to stay on pace with USDA's projection of 1.1 billion bushels for the marketing year.
Corn
The corn market had losses on the week with stiff outside market pressures.
The corn market opened higher Feb. 9 with March up 0.75 cent and had stronger gains early before backing off to close unchanged to up 0.75 cent. The outside markets were mixed with support from the lower dollar, while crude oil lost its early gains by the end of the day. There were rains in Brazil, in the state of Parana, which is the biggest corn-growing state. Export inspections for the week were within expectations at 28.8 million bushels, while 36.1 million bushels were needed to keep pace with USDA projections.
The corn market opened higher Feb. 10 with May up 2 cents but quickly dropped with up to 10-cent losses. The market slowly came back throughout the session to close with 1-cent losses. The outside markets were mixed early, but by the end of the day, there were sharp losses in the stock markets and crude oil plus a stronger dollar. The monthly USDA supply-demand report left carry-out unchanged for corn, which was positive news as traders had been expecting bigger numbers. World corn production was cut because of weather problems in South America, but world usage also was cut to leave ending stocks slightly larger.
The weekly export sales report had amazing sales of 60.8 million bushels for corn, which enabled corn to be the market leader for most of the day, but the outside market pressures were too strong with crude oil down $1.50 to $2, the Dow Jones down more than 100 points for most of the day and the dollar higher.
USDA estimated last week's corn export sales at 60.8 million bushels, which was another new marketing-year high for sales. This brings the year-to-date export sales pace for corn to 1.04 billion bushels compared with 1.90 billion bushels for last year at this time. Expectations were for sales of 37.4 million to 45.3 million bushels, with 25.7 million bushels needed to keep pace with projected export sales of 1.75 billion bushels. Shipments of 22.3 million bushels were less than what was needed to keep pace with projections.
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With strong carry in the futures market and weakness in the cash market, sales of old crop corn should be made in deferred months (i.e. July) if possible. Options could be used to protect the downside.
Soybeans
Soybeans had losses this week with economic woes weighing on the market.
The soybean markets opened higher Feb. 9 with March up 9.75 cents. The buying interest waned throughout the day and closing prices were mixed, up 3 cents to down 3 cents. The outside markets were mixed with support from the lower dollar while a decline in crude oil prices during the day dragged down the soybean market. There were rains in Brazil, in the state of Parana, while Rio Grande do Sul remains dry. Export inspections for the week were well above expectations at 46.6 million bushels, while only 13 million bushels were needed to keep pace with USDA projections.
The soybean markets opened higher Feb. 10 with May up 5 cents but quickly dropped with up to 15-cent losses. The market then came back before losing some ground again late in the session to close with 4- to 8-cent losses. The outside markets were mixed early, but by the end of the day, there were sharp losses in the stock markets and crude oil plus a stronger dollar. The monthly USDA supply-demand report lowered soybean carry-out from 225 million to 210 million bushels, but that was not as big of a cut as traders were looking for. World soybean production was cut with big cuts in South America, and world ending stocks are projected to be lower. The combination of forecast rain for Argentina and exhaustion after several strong sessions contributed to the losses for the day.
The soybean markets opened higher Feb. 12 with May up 1 cent and had continued buying interest early. The market then moved lower for the majority of the session because of outside market pressures as soybeans closed with 9- to 18-cent losses. Export sales were very good at 39.3 million bushels, and shipments were excellent at 51.2 million bushels. Forecasts for Argentina call for hot and dry weather through Feb. 17, while 1½-inch rains fell in southern Brazil. The market seems to be poised for a rally with tightening carryout and production concerns, but the funds have been unwilling to buy and hold.
The soybean cash market is firm with light farmer selling and strong export demand. If you are holding corn and soybeans and need to sell cash grain, soybeans would receive higher priority at this time. Cash sales could be renowned with call options.
Canola
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By the end of the week, the canola market had given back its gains from two higher sessions to start the week. Contracts were $1 to $4 (Canadian) lower by the end of the week with the front month contracts receiving more pressure than the deferred contracts. The March contract closed $3.80 (Canadian) lower for the week to $425.80 and the November contract closed $1 (Canadian) lower to $448.80. Pressure during the week came from big losses in the U.S. soybean complex and crude oil market with nearby soybean contracts losing around 30 cents for the week and the March crude oil contract dropping $5 per barrel. More negative news came from Argentina as beneficial rains fell on multiple days, which helped to ease some of the stress on their soybean crop. Losses during the week were limited by weakness in the Canadian dollar and strong export demand as China purchased two more cargoes of canola. Cash bids in Velva, N.D., Feb. 12 were down 24 cents to $15.33.
Barley
USDA's export sales report showed 179,000 bushels of barley sold last week to Canada. Export inspections of barley last week showed shipment of 20,000 bushels, which is far less than the 112,000 bushels last week and 1.39 million bushels in this week last year. This brings total barley shipments for this marketing year to 10.8 million bushels compared with 28.7 million bushels last year at this time. Cash barley bids in Minneapolis were higher with feed up 5 cents to $2.55, and no malting bids were reported this week.
Durum
There were no export sales or shipments reported last week for durum. The total export shipments for the year remain at 13.2 million bushels and sales are at 15.1 million bushels. Cash bids for durum range from $7 to $7.70.
