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Wheat leads gainers

Wheat The wheat market started the week on the defense, following all of the other grains to the lower side. Adding selling pressure was the past weekend's rains that fell over parts of the winter wheat region. Although amounts were not abundant,...

Wheat

The wheat market started the week on the defense, following all of the other grains to the lower side. Adding selling pressure was the past weekend's rains that fell over parts of the winter wheat region. Although amounts were not abundant, rains did fall in parts of Kansas, Oklahoma and Texas. This should improve the condition of the winter wheat crop. The April 20 session appeared to be more about massive selling (or money) than it did about anything else. The funds were aggressive sellers and that was very evident in the market activity. Losses were trimmed by the slightly decent export inspections report. The report was not overly bullish, but it was a decent number.

The April 21 session started off sluggish, but it did not take the wheat long to firm up. Early support was a result of spillover support from a higher corn market. Support came from continued slow spring wheat planting progress as well as continued concerns toward the condition of the winter wheat crop. The Southern Plains will continue to receive dry weather, which will add additional stress to an already poor winter wheat crop. Wet conditions and continued rain in the forecast will further prevent farmers from planting their spring wheat acres in the north. Both of these issues helped to added buying strength to the wheat market.

By midweek, the wheat market was trading with little fanfare. Traders were trying to correct another sold market condition and that helped all three of the wheat exchanges to start the day higher. But soon after midsession, the Minneapolis exchange caught fire and rallied to trade with double-digit gains. The Minneapolis market finally is starting to respond to the fact that many producers in the Northern Plain states can neither haul out old crop wheat nor get in the fields to start planting new crop wheat. This is creating a short-term supply issue for spring wheat as many end users are in need of wheat right now (this should help basis to improve and discounts to lessen). Concerns also are starting to mount on the delays in planting progress. As each day passes, more wheat gets pulled out of planting intentions. And at this point, with current forecasts, it appears that many producers in the Northern Plains will not be in the field until May 1 to May 15.

The April 23 session started with small losses but opened the trading day 1¼ cents higher and established a higher range through midday. The higher opening attracted large amounts of buyers, which took July wheat to substantially higher levels by midday. Support in the Chicago wheat market was helped by support from the Minneapolis market yesterday. News that a potential 1.2 million acres of cropland in North Dakota might not get planted helped to push the spring wheat contract higher. Weather forecasts call for rain in the Plains states. Rain amounts in the North are not that big, but amounts for the Southern Plains are heavy. Early estimates have parts of Oklahoma having a potential 5 to 7 inches of rain over the next two weeks. This produced strength in the wheat market. April 23's export sales report was also friendly to wheat and helped to add strength.

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Spring wheat plating is estimated at 6 percent complete compared with 2 percent for last week and 21 percent for the five-year average. This is the second-lowest planting progress for spring wheat since 1997, when only 5 percent of the crop was planted by this date.

Corn

Corn prices did almost nothing, dropping sharply April 20, gaining it back the rest of the week and then dipping again April 24 to finish about unchanged for the week. Good weekly export sales-shipments continue to indicate stronger export demand, which is friendly. But an open week of weather with very little rain allowed rapid planting progress in areas dry enough to plant and also helped dry all week those areas still too soggy to plant this week. A decent percentage of growers probably were able to start (or continue) planting, but that window is forecast to close with some pretty decent rains forecast the next seven days that should halt planting in most areas.

The question is, how much got planted while weather was ideal? Did we catch up to "normal," or we still are lagging behind and by how much? We will get updated planting progress numbers April 27 that will answer these questions, but additional unknowns will affect the market: How much of this forecast rain actually will fall the next seven days? Will the forecast change by early next week and how much? What will the next couple weeks bring if planting delays occur over the last week in April? These are critical questions right now to answer for the U.S. crop prospects in 2009.

Technically, the market had a deep correction lower into April 20, putting into jeopardy the recent delicate uptrend evident on charts as we dropped to new recent lows in corn. Was this a bear trap, getting producers to sell and then resume the uptrend? Or is this the start of a new trend? The market is at a crossroads right now, trying to decide if 2009 weather is favorable (and a bear market can develop) or unfavorable (and a bull market emerges this spring). Pro Ag is leaning toward the bull side mainly because of indications that a bottom has been formed in most commodities. With stability followed by a recovery in economic circles, the commodities should find some support in current levels and get additional support if markets are convinced of inflationary threats.

A positive push in crude oil late in the week also was friendly, as crude pushed down to what should end the current correction in the market. This might be a good place to purchase any remaining energy needs for 2009 crops (fuel, nitrogen fertilizer, propane) on futures or options markets.

Soybeans

Soybeans had been on a torrid bullish market tear recently, rallying quickly the past few weeks to gain $2 in cash beans since early March. The sharp rally in soybean prices is related to the huge export sales, which have been at an unsustainable pace recently. This week, we sold more than 50 million bushels of soybeans in exports, with another strong week of shipments. This is really what's driving the bull market in old crop soybeans, as we continue to have a need to subtract ending stocks due to stronger exports. This week the market stalled, leaving prices with small losses (-2 cents November new crop, -10 cents May old crop futures) for the week.

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Outside markets didn't provide much support, with crude oil dropping sharply April 20 and gaining back most of those losses by the end of the week but still finishing with $1 losses for the week. However, we may have found support levels in crude after our bottoming action this summer, so now might be a good time to lock up energy needs for the coming year. Buying futures-options might be best to lock up supplies at current price levels, but if buying cash commodity, you do need to ensure a good "basis" on these fuel needs.

Gold prices, however, skyrocketed with $47 gains or nearly 5 percent. Does this mean inflation is right around the corner? The threat of inflation might keep prices of commodities supported this year, especially if the U.S. and world economy stabilizes in the near future and sees a recovery later in 2009. That combined with stimulatory fiscal and monetary policy could spark more heated inflation, and that can provide a strong buoyant support under most commodity markets. Typically, inflation worries show up in gold markets initially before spreading into other markets. But this spike in Gold prices might be signaling the beginning of more commodity inflation near term.

Overall, it's been a great run higher in soybeans, and old crop soybeans probably can be sold at any time as futures are drastically improved. Once we get a basis 40 cents better than "normal" for your area, its probably best to sell out of remaining cash soybeans. You might want to, however, check those basis levels because with the sharp futures gain, the soybean basis actually has worsened for many cash sales. Once sold, since soybeans are inverted in futures (May 6 cents higher than July, July 24 cents higher than August) you may want to buy them back and own August futures (or earlier) at a discount to current prices. At some point, though, we are going to have to sell these soybeans and let go ($11? $12? $14?). Somewhere, there is an acceptable net price for 2008 soybeans -- which look to be very tight in ending stocks before 2009 harvest.

Barley

USDA estimated no barley export sales for last week. This brings the year-to-date export sales pace for barley to 10.9 million bushels compared with 41.5 million bushels for last year at this time. Last week, there also were no barley shipments reported. This brings the year-to-date export shipments pace for barley to 11.2 million bushels compared with 33.3 million bushels for last year at this time. All five of the major barley-producing states are showing slow planting progress, but North Dakota is reported the slowest planting pace with no progress as of April 19.

Canola

Canola futures on the Winnipeg, Manitoba, futures exchange closed higher for the week with most contracts $4 to $5 (Canadian) higher for the week. The canola market started the week lower with much of the pressure coming from spillover selling from the sharply lower U.S. soybean complex as well as from a sharply lower U.S. energy complex. But the canola market traded with gains. Support came from spillover buying from the stronger U.S. soybean complex as well as from a stronger U.S. energy complex. Reports that Pakistan was in buying two cargoes of canola and that China was in looking to buy canola added some support to the canola market.

Sunflowers

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Soybean oil futures ended the session lower for the week , well off the lows that were set April 20.

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