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Wheat recovers, stays on pace

Wheat has regained most of the losses from a sharply lower session Jan. 20. Chicago wheat is down 11.5 cents, Minneapolis is nearly unchanged, and Kansas City is down 8 cents.

Wheat has regained most of the losses from a sharply lower session Jan. 20. Chicago wheat is down 11.5 cents, Minneapolis is nearly unchanged, and Kansas City is down 8 cents.

The wheat market opened the day Jan. 20 slightly higher after trading lower in the overnight session. Soon after the open, wheat came under pressure from the outside markets and continued to work lower the rest of the day. Without any new news of its own the wheat market became a follower of the outside markets. A sharply higher U.S. dollar and sharply lower stock market pressured the wheat market for much of the session. Late in the day, the soybean and corn markets came under selling pressure and pulled the wheat market down to close with losses of 20 to 30 cents across all exchanges. Another big rally by the U.S. dollar really hurt the wheat market that is already plagued by poor export sales.

After posting gains in the overnight session Jan. 20, the wheat market opened higher Jan. 21 and steadily worked higher to end with gains from 5 to 19 cents in all three exchanges. The wheat market surprisingly was able to hang on to the gains in the overnight session, despite lower overnight trade in corn and beans, with the support from the lower U.S. dollar.

News that Egypt is tendering 60,000 tons of wheat from the U.S. was supportive for the wheat market because it is an indication that U.S. wheat may be becoming more competitive on the world market. It is difficult to be too bullish on news of a small tender from Egypt though because the export inspection report Jan. 21 showed that the U.S. shipped a measly 6.9 million bushels of wheat last week, which is less than half of the 14.8 million bushels needed to stay on pace with U.S. Department of Agriculture's projection for the year.

The big gains in wheat market Jan. 21 could most likely be attributed to a sharply higher soybean market and some technical buying as traders thought wheat was oversold after the big losses Jan. 20.

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The wheat market closed higher Jan. 22 in the overnight session, but came under commoditywide selling pressure after a slightly higher open. After the initial sell off, wheat staged a small rally to recover most of its losses from early in the day. This small rally was not enough to pull all contracts in the three exchanges back into positive territory.

Movement in the wheat market Jan. 22 was almost entirely based on the movement of the outside markets. Early in the session, a sharply lower stock market and crude oil market along with a higher U.S. dollar pressured corn and beans to double-digit losses, which spilled pressure into the wheat market. The wheat market did recover near midday on weakness in the dollar and a rebound in the stock market to close mixed in Minneapolis and down 2 to 5 cents in the other exchanges.

USDA came out with its export sales report Jan. 23, and it showed wheat sales for last week were 15.1 million bushels. This is 5.4 million bushels more than the 9.7 million bushels needed to stay on pace with USDA projections. For the marketing year, wheat sales are at 820.5 million bushels compared with 1112.8 million last year at this time.

Corn

The corn market has had little net change for the week with conflicting weather reports and mixed outside market pressures.

The corn market opened higher Jan. 20 with March futures up 7.5 cents. The strong early buying interest gave way to selling pressure late in the session. The market closed lower with 6- to 7-cent losses. Weather reports out of South America were supportive and corn fared much better than soybeans on the day. Rains fell in Brazil while the main corn growing regions of Argentina remained dry. Corn-bean spread traders have been buying corn and selling beans.

The corn market opened lower Jan. 21 with March futures down 1 cent. Corn established little momentum up or down but closed up 5 to 6 cents with support from wheat and soybeans. The weekly export inspections came in below expectations again at 26.7 million bushels, which also was less than the 35 million bushels needed to keep pace with USDA projections, so the export inspections were bearish once again. Forecasts were calling for more hot and dry weather in Argentina, so that helped to support this market. There was little outside market direction with most of the outside influence coming from within the grain markets.

The corn market opened lower Jan. 22 with March futures down 1 cent. Selling pressure quickly brought the market sharply lower. Corn regained most of its losses by the end of the session, closing down 2 to 3 cents.

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Forecasts that were calling for more hot and dry weather in Argentina next week were offset by rain forecasts for the coming weekend, which made trade choppy and slightly negative. Outside market pressures were negative with lower stock markets and crude oil, while a small recovery in those markets later in the session helped the corn to light losses.

USDA estimated last week's corn export sales pace at a surprising 42.8 million bushels. While we only needed corn sales of 26.8 million bushels this week to keep pace with projected export sales of 1.75 billion bushels, this is the first week in a long time that sales have exceeded expectations. We are going to need more than one week of strong export sales to get us back on track. This brings the year-to-date export sales pace for corn to 889.8 million bushels compared with 1.75 billion bushels for last year at this time.

Soybeans

Soybeans had a small net loss for the week with outside market pressures overpowering the underlying bullish fundamentals.

The soybean markets opened higher Jan .20 with March futures up 1.5 cents. Selling pressure quickly entered the market with progressively lower trade all day. Soybeans closed with 18- to 28-cent losses. The dry weather in Argentina was not supporting the soybeans as much as the corn, and weekend rains in soybean producing regions of Brazil put pressure on the market. The sharply higher dollar combined with lower stock markets and deferred crude oil contracts also put pressure on the soybean market.

The soybean markets opened lower Jan. 21 with March futures down 0.25 cent. Buying interest quickly entered the market and drove prices higher throughout the day, closing up 20 to 28 cents. Soybeans were able to lead a charge to the upside today with another round of strong export inspections. The USDA report put weekly export inspections at 37 million bushels, which was above expectations and well above the 16.2 million bushels needed to keep pace with projections. The exports are likely to back off though in the next two weeks with the upcoming Chinese new year holiday.

The soybean markets opened lower Jan. 22 with March futures down 2 cents. Selling pressure quickly brought the market lower. The market slowly gained ground during the session, closing with 8- to 16-cent losses. Most of the market direction for the soybeans came from the lower stock markets and energy markets. There were conflicting weather reports from South America and there was talk of further cuts to South America production estimates. The November contract continues to suffer from spread trading, driving the new crop bids down in anticipation of higher acres in 2009.

USDA estimated last week's soybean export sales at 48.7 million bushels, well above the 8.6 million bushels needed to keep pace with USDA projections. This brings the year-to-date export sales total for soybeans to 865.9 million bushels compared with 829.5 million bushels for last year at this time. USDA is projecting this year's soybean export sales pace to be 1.1 billion bushels. Export sales likely will be much smaller in the next few weeks with the impending Chinese new year holiday.

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Canola

The canola market had losses for the week because of stiff outside market pressures.

Canola had support at times during the week from dry weather in South America and some positive trade in the soybean markets.

A forecast for rain in Argentina for the weekend, an increase in farmer selling and slowing exports were all negative factors for the canola market. A weakening Canadian dollar was supportive and may have limited losses. There also was news that more canola exports have been booked, however, they have not been officially reported yet.

The canola market once again has pushed itself up to a level of resistance. If these exports materialize and the U.S. soybean market can avoid any big losses, technical buying could trigger the canola market to make a big push higher. Cash bids, as of Jan. 23, in Velva, N.D., were at $15.49.

Barley

USDA reported barley shipments of 128,000 bushels for last week. This compares with 8,000 bushels the week before and 622,000 bushels the previous year. This brings the year-to-date export shipments for barley to 10.6 million bushels compared with 27.2 million bushels for last year at this time. Cash barley bids for the week in Minneapolis remain unchanged with feed at $3.20 and malting at $5.20.

Durum

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According to the USDA export sales report released Jan. 23, durum export sales for last week were at 100,000 bushels. This brings the marketing year total to 14.5 million bushels compared with 35 million bushels last year at this time.

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