Weather supports USDA pressures

Wheat

Wheat finished higher Oct. 5 on technical buying after Oct. 2's lower close. The December contract on the Chicago Board of Trade hit a fresh contract low Oct. 2 of $4.3925. This set the stage for the technical bounce that was the feature of the market for most of the day. Fundamentally, there wasn't much fresh news for the market and the outlook still looks bearish with plenty of wheat supplies worldwide. That news provided the pressure that trimmed gains near the close. Also, spillover from neighboring grains played a part with corn and soybeans providing support early in the day.

The Oct. 6 session finished the day sharply higher on spillover support from neighboring grains. The market took on the role of a follower, which allowed it to rise sharply higher along with corn and soybeans. In addition, short-covering stepped in to help the upward movement. Providing underlying support were the outside markets with the U.S. dollar lower for the day. The U.S. dollar can have a significant influence on the wheat markets because a lower dollar helps to attract international buying interest, which is important because wheat got off to a slow start in export sales for the 2009 to '10 marketing year.

Wheat closed mostly higher midweek as the market once again gets some technical buying interest. The market closed higher Oct. 6, and with the large net short position on the CBOT from noncommercial speculative funds, the market remains poised for bounces from short covering. Adding some spillover support are the neighboring grains with corn and soybeans both higher for the day. Position squaring ahead of the October USDA reports also was seen. The reports are expected to reveal a larger wheat carry-over for the U.S., which could add more bearish fundamentals to the market, though the idea that U.S. wheat is plentiful already should be worked into the market and thus the impact may be minimal.

The market finished higher Oct. 8 on support from neighboring grains and outside markets. Wheat rose higher on spillover from higher soybeans and corn as well as a weaker U.S. dollar. In addition, some speculative buying set in to continue the bullish momentum. In fact commodity funds bought an estimated 4,000 contracts on the CBOT. The day's bullish movement helped the December contract on the CBOT hit one-month highs of $4.83 before the market turned to trim some gains near the close.

The Oct. 9 USDA supply and demand report increased wheat ending stocks by 121 million bushels because of an increase in production and a reduction in use. This more than offset the 10 million-bushel reduction in carry-over. Globally, wheat supplies have been increased again by 2.2 million tons. This is a result of an increase in world production and is the amount minus the 2.2 reduction in beginning stocks. The majority of the increase in production came from increases in the Canadian and Russian crops.

Corn

Corn futures were 30 cents higher (December) compared with the close last Oct. 2. The corn market traded the weather forecast. Wet weather materialized across the country, delaying harvest. Freezing temperatures also entered the forecast throughout the Midwest, ending this growing season. The outside markets also influenced the corn market.

To start the week, the corn market traded higher and closed with 8- to 8.25-cent gains. The corn market opened slightly higher and closed higher. The outside markets were positive, crude oil and the Dow Jones Industrial Average were up to support the trade. The wet weather through most of our country will delay harvest and did take this market higher for most of the Oct. 5 session.

The Oct. 6 corn market traded higher and closed with 17- to 17½-cent gains. The outside markets were positive, crude oil and the DJIA were up and the dollar was lower to support the trade (inflation). The wet weather, throughout most of our country, will delay harvest and helped add to the gains. The December contract hit a three-month high.

The corn market traded slightly higher Oct. 7 and closed with 1¼- to 1¾-cent gains. The corn market took a breather after the last two-day run. The outside markets were not supportive and limited the gains.

The corn market traded higher Oct. 8 and closed with 3¼-cent gains. The market opened higher and closed slightly higher, coming off the highs at the close. The outside markets were very supportive, with the dollar making new lows and gold making new highs, along with crude oil up more than $2 a barrel.

The corn market traded slightly higher at midsession Oct. 9. USDA's crop production report was seen as bearish to the corn market. The trade did not pay attention to that as it went back to weather concerns. Weather-delayed harvests gave the market direction.

Soybeans

Soybeans finished steady to higher after a volatile trading day Oct. 5. The market opened lower out of the overnight on carry-over selling from Oct. 2's lower close. However, the downward trend ran out of steam and traders began focusing on the weather situation with frost in the forecast for the Midwest and the cooler, wetter temperatures having the possibility of causing harvest delays. Concern about the 2009 crop, strong export demand and gains in neighboring crops were all fundamentals that helped to push soybeans higher. Near the close, these gains were trimmed back as traders started to look to USDA's October reports.

Soybeans finished sharply higher Oct. 6 on technical buying, weather concerns and with underlying support from the outside markets. Soybeans have been in a trend of moving lower, which is lending the market to the technical buying, which helped push the market bullish for the day. Weather also is playing a major role, with concerns over the cool and wet weather in the Midwest, which is unfavorable for the remaining crops development and also contributing to harvest delays.

Midweek, the market finished slightly higher after being trapped in choppy, two-sided trade for much of the day. The frost concerns, while still present, are having less impact on the market, and there is a lack of other fresh news to help traders pick a direction. Wet conditions continue to delay harvest activity, however, traders didn't want to enter the market ahead of the October USDA reports. As a result, much of the Oct. 7 trading was just consolidation.

Soybeans finished higher Oct. 8 as traders squared their short positions. The outside markets also helped commodities in general with the U.S. dollar moving lower for the day. Additional support came from the weather outlook.

The Oct. 9 USDA reports revealed that soybean production was slightly higher than what was forecasted in September. This increase is a result of the increase in yields.

Barley

USDA's barley October supply and demand estimate was negative as it showed a 31 million-bushel increase in ending stocks. As expected, barley's yield was increased 7.8 bushels per acre from the September report to 72.8 bushels per acre. This increased supply by 20 million bushels. On the demand side, USDA cut feed demand by 10 million bushels.

USDA reported no barley shipments for last week. This brings the year-to-date export shipments total pace for barley to 806,000 bushels compared with 7.2 million bushels for this time last year. There was no barley export sales reported for last week. This brings the year-to-date export sales estimate for barley to 3.1 million bushels compared with 8.2 million bushels for last year at this time.

Durum

In their October S&D report USDA increased durum production by 12 million bushels (because of an increase in yield), but that increase was almost entirely offset by a 10 million-bushel increase in durum export demand. The net result was a 2 million-bushel increase in ending stocks, now estimated at 53 million bushels.

USDA estimated last week's durum export shipments pace at 2.5 million bushels with the major destinations being: Italy: 933,000 bushels, Algeria: 925,000 bushels, and Canada: 391,000 bushels. USDA estimated last week's durum export sales pace at 3 million bushels. This brings the year-to-date export sales total for durum to 25.7 million bushels compared with 11.7 million bushels for last year at this time.

The Cass County, N.D., durum LDP dropped to now be at $1.38. Cash elevator bids for durum are running from $3.50 to $4.

As of Oct. 4, 93 percent of North Dakota's durum crop was harvested compared with 84 percent for last week and 95 percent for the five-year average.

Canola

Canola futures on the Winnipeg, Manitoba, futures exchange closed slightly higher for the week as many of the canola contracts ended with about $1.50 (Canadian) gains. Most of the strength in the canola market spilled over from a higher U.S. soybean and energy complex. Gains were kept in check by a stronger Canadian dollar.

USDA estimated canola production for the 2009 to '10 crop year at 1.5 billion pounds, up from last year's estimate of 1.4 billion pounds. USDA is estimating harvested acreage to be 181,500 acres lower than last year at 807,500, but the yield is projected to be at 1861 pounds compared with 1461 for last year.

Sunflowers

USDA estimated all sunflower production for the 2009 to '10 crop year at 2.98 billion pounds down from 3.4 billion for last year. The yield is projected to be 1538 pounds per acre (up from 1429 last year) with harvested acreage estimated at 1.94 million, down from 2.4 million for last year. Nonoil sunflower acreage is estimated at 315,000 acres compared with 334,000 acres for last year, while oil sunflower acreage is estimated at 1.6 million compared with 2.1 million for last year.