Wheat volatility continues
Wheat The recent volatility exhibited in the wheat market continued this week as all three exchanges recovered most of the 30- to 50-cent losses from last week. Wheat rallied based on weather concerns for both winter wheat and spring wheat and su...
The recent volatility exhibited in the wheat market continued this week as all three exchanges recovered most of the 30- to 50-cent losses from last week. Wheat rallied based on weather concerns for both winter wheat and spring wheat and support from the outside markets. The U.S. Department of Agriculture reports for projected plantings and quarterly stocks came in somewhat neutral, so wheat was left to trade on weather and the outside markets. Wheat acreage is expected to be cut based on USDA's Projected Plantings report, however quarterly stocks still are very high, making a cut in wheat acres manageable assuming more acres are not lost to planting delays. In the nearby contracts, for the week, Chicago wheat was up 44.25 cents to $5.515, Minneapolis spring wheat was up 40.75 cents to $6.425, and Kansas City was up 42.75 cents to $5.9275.
The wheat market opened lower than expected March 30 because of heavy downward pressure from the outside markets. Pressure from the outside markets continued throughout the session as the Dow lost more than 300 points, the U.S. dollar was up more than 80 points and soybeans posted double digit losses again. After dropping to session lows early in the day, the wheat markets found buying interest when they reached a support level set in early March. Technical buying then combined with weather concerns and report expectations to push prices higher through the close.
The wheat markets opened the session higher March 31, on spillover support from the soybean market and mixed news from USDA.
The wheat market closed the overnight session lower April 1 because of weakness in the stock market and corn market, and strength in the U.S. dollar. Wheat opened the day 5 to 7 cents lower and had extended losses to double digits by midday on profit-taking and outside market pressure.
The wheat market gained ground in the overnight session on April 2, with the help of overnight losses in the U.S. dollar index and gains in the row crop markets. When the trading session opened, wheat rallied to its highs of the day on major weakness in the U.S. dollar, gains in the stock market, and spillover support from corn and soybeans.
Wheat export sales for last week came in at 10.4 million bushels, according to USDA's export sales report. This was below trade expectations that ranged from 11 million to 15.6 million bushels but still above the 5.7 million bushels needed to keep pace with USDA's projection of 980 million bushels for the marketing year. This brings the total export sales for the year to 933.3 million bushels, which is far less than the 1.21 billion bushels last year at this time.
USDA's Prospective Plantings report showed all wheat acres for 2009 are expected to total 58.6 million acres. This is a 7 percent or 4.5 million acre drop from the 63.1 million acres planted last year. It also estimates that only 13.3 million of those acres will be planted to spring wheat, which is down 6 percent or 831,000 acres from last year's total of 14.1 million acres. Nearly 60 percent of the lost spring wheat acres are expected to come from North Dakota and Montana. Quarterly stocks for all wheat were reported to be 1.04 billion bushels, which is up 46 percent or 331 million bushels compared with March 1 of last year. On-farm stocks are estimated at 280 million bushels which is up 205 percent from last year.
The corn market started the week lower with May futures down 6.75 cents, but quickly recovered to trade with light losses for the rest of the day and posted closing prices down 1 to 2 cents. There was heavy pressure from outside markets with crude oil more than $3 lower but corn actually fared pretty well because of traders being unwilling to stake out a large position ahead of the March 31 planting intentions report.
Session had the corn market opening higher March 31 with May futures up 7.75 cents but quickly moved lower with mixed trade during the first half of the day. The market then rallied late in the day and posted closing prices up 17 to 18 cents. May corn closed above $4 for the first time since Jan. 26.
The corn market was trading with modest to strong losses throughout the session by midweek. The lower stocks estimate does show us that USDA has been under estimating corn's demand. But that will be easily fixed by increase feed demand in the April S&D report. This will be slightly friendly but not 18 to 19 cents friendly. April 3 was a day for the unwinding of long corn and short soybean spreads and for the funds to be running for the door. Technically corn had pushed up against resistance levels yesterday and once again the $4.35 level stopped the December contract in its tracks. It will take quite a bit of bullish news to get through that level.
The corn market started the session higher April 4 and rallied to post decent gains. Early support was a result of carry-over buying from the strong soybean complex.
USDA estimated last week's export sales pace for corn at 49.6 million bushels with all but 300,000 bushels being old crop. This brings the year-to-date export sales pace for corn to 1.299 billion bushels compared to 2.1 billion bushels for last year at this time. Last week's export inspections were estimated at 35.8 million bushels, which was above expectations and above the 33.9 million bushels needed to make pace. USDA is projecting corn's 2009 export pace at 1.7 billion bushels.
The soybean market started the week lower with the May contract down 19 cents and rallied back some before posting closing prices down 12 to 18 cents. Outside markets put heavy pressure on soybeans with sharply lower energy markets, a higher dollar and lower stock markets. The soybean market actually fared well considering that crude oil was more than $3 lower. New crop soybeans were the leader to the downside due to expectations for increased acres. Pre-report estimates for the March 31 planting intentions report are in a range of 75.9 to 81.5 million acres with the average guess of 79.3 well above last year's planted acreage of 75.7 million acres. Old crop will also have news from the quarterly stocks report, and traders are expecting further tightening of old crop supplies. Export inspections were almost double what are needed for the week.
Session had the soybean market opening sharply higher April 1 with the May contract up 35 cents but had some choppy trade before rallying to post closing prices up 47 to 52 cents. The quarterly stocks report showed 1.302 billion bushels, which was below expectations and below the 1.434 billion bushels in inventory at this time last year.
The soybean complex started the session higher April 2 and rallied early in the session. Early support was due to continues strong export demand. It appears that everyone still is very interested in buying soybeans from the U.S. and that resulted in last week's soybean sales estimate to be at 43.4 million bushels combined old crop new crop.
USDA estimated last week's soybean export sales pace at an impressive 43.4 million bushels with 22 million bushels being old crop and 21.4 million bushels being new crop. This brings the year-to-date export sales pace for soybeans to 1.069 billion bushels compared with 995.6 million bushels for last year at this time. Last week's soybean export inspections at 23.5 million bushels, which was within expectations and, but well above the 11.9 million bushels needed to keep pace with the USDA projection of 1.185 billion bushels.
Canola contracts rallied sharply higher this week following the Prospective Plantings report. The report showed that soybean acres are only expected to increase by 1 million acres which was far less than expected and very supportive for both canola and soybeans. After the release of the report, canola rallied the remainder of the week and closed the week with contracts gaining from $14.50 Canadian dollars to $15.30 Canadian dollars. The May contract closed $15.30 Canadian dollars higher for the week to $430.30 and the November contract closed $14.50 Canadian dollars higher to $439.70. Cash bids April 3 in Velva, N.D., were up 53 cents to $15.17, and were up 54 cents for the week.
The USDA is estimating that barley acres will drop 7 percent from 4.23 million acres to 3.95 million acres in 2009. They also reported that barley stocks are up 16 percent from last year at this time with most of that increase coming from a 56 percent increase in on-farm stocks. Barley finally ended its two-week export shipment drought with shipments last week of 12,000 bushels. Total barley export shipments for the marketing year are now 11.1 million bushels compared with 32.3 million bushels at this time last year. No export sales were reported for barley last week, which leaves the total for the year at 11 million bushels compared with 40.8 million bushels last year at this time. Cash barley bids in Minneapolis for the week ended with feed unchanged at $2.70 and no malting bids were reported this week.
Based on USDA's Planting Intentions report, durum acres are expected to decline about 10 percent or 286,000 acres from last year with about 70 percent of that decline coming from North Dakota. Durum stocks are up an estimated 30 percent from last year and as of March 1 totaled 32.8 million bushels. Durum export shipments for last week totaled 96,000 bushels according to USDA's export inspection report. Total durum shipments to date are 14.26 million bushels. Durum exports sales went in the wrong direction according to USDA's export sales report. Sales of 400,000 bushels were canceled, dropping the total durum export sales for the year to 15.8 million bushels compared with 37.9 million bushels a year ago. Cash bids for durum range from $6.10 for decent quality durum to $6.25 for No. 1 hard.