As planting deadlines arrive, weather market rages on
The week started out higher as Memorial Day weekend rains saturated a band from eastern Kansas to the Great Lakes Region. Weekly crop progress report showed spring wheat is 84% planted compared to 91% for the five-year average. Trade was expecting 86% to 87%. Emergence of spring wheat is at 47% versus 69% average.
Winter wheat conditions declined 5% in the good to excellent category to 61%. The crop is rated 30% fair and 9% poor to very poor. Winter wheat headed is at 66% compared to 76% for the five-year average. Heavy rains of the past week were the culprit for the decline in ratings. Stories of stripe rust affecting Southern Plains wheat are starting to circulate. Six-to-10-day forecasts show heavy rain potential for the Kansas City wheat belt, which made nervous shorts this week. Extended 16-to-30-day forecasts are also wet for the harvest time frame. Winter wheat yield models show a decent sized crop, but it looks like quality could be greatly affected if rainfall patterns continue.
With the U.S. seeing unusually wet conditions, some drier forecasts elsewhere in the world enticed buying later in the week. Southern Canadian provinces are experiencing dry conditions, and forecasts show hotter weather in the Black Sea Region next week. There was also a report out from the Australian weather bureau that looks for expansion of its drought stricken areas. An article from Reuters stated that the highest population state of New South Wales, Australia, imposed water restrictions for the first time in 10 years due to the countries prolonged drought.
Weekly export inspections were 494,000 metric tons (18.2 million bushels) which was at the low end of trade expectations. Russian wheat prices for 12.5% protein increased $2 per metric ton last week to $188 per metric ton.
A private forecaster estimated Ukraine's wheat crop could increase 8.4% to 25.9 million metric tons this year based on favorable weather. It also increased barley estimates by 400,000 metric tons.
The U.S. dollar trended higher for the week to the $98 area. The dollar remains rangebound between $97 and $98 and is approaching the recent high of $98.26 set May 23.
Current support for July Minneapolis is $5.43 with $5.68 followed by the March 22 high of $5.76 as resistance.
For the week ending May 30, July contracts for Minneapolis wheat were up 15.5 cents at $5.635, up 25 cents at $5.145 for Chicago wheat, and up 37 cents at $4.79 for Kansas City wheat.
Corn gapped higher in the overnights to start off the week of May 27. Volatility came into the market as farmer selling pressure hit the new crop futures after December traded up to five-year highs. Corn continued to scream higher after this minor setback as the deadline is arriving quickly before the last plant date starts hitting farmers. Rains this past weekend across most of the Corn Belt is driving prices higher, and forecasts are looking like it will only give the farmer small windows to continue planting.
The U.S. Department of Agriculture reported farmers were only 58% planted as of May 27 versus the five-year average of 90% complete and 90% last year at this time. The trade was expecting 60-63% planted in the May 28 planting progress report. U.S. farmers only put in 9% of the crop the past week, and corn plantings are the slowest pace on record. Since records were kept, the slowest planting pace as of May 26 before this year was 67% in 1995. The U.S. was even 78% complete in 1993, the year analysts and farmers alike are comparing to this year.
Corn emerged was at 32% versus 69% last year and 69% for the five-year average. This is 21% slower than the second slowest emergence pace since records have been kept. According to Karen Braun with Reuters, this is a list of the slowest years for corn emergence since 1999:
(1) 2019 32%, (2) 2002 53%, (3) 2013 54%, (4) 2008 55%, (5) 2011 57%, (6) 2009 58%.
The USDA doesn't typically start crop condition ratings until around 50% of the crop is emerged. They are likely to come out June 3, and the rating will likely be some of the lowest we have seen for this time of year due to cool and saturated conditions.
With about 38 million to 39 million of corn acres yet to be planted compared to the USDA spring projections, this market rally may not be over. It could be healthy if December corn futures go back and fill the gap it left at $4.20 to $4.23 before it could take its next run. This market is on fire and may just feel like not giving traders a chance to buy breaks.
It seems like only yesterday, but it was a year ago to the week when the tariff news came out and crop ratings came in well above expectations. That was the start of the sell off and bad prices that lasted 11½ months.
Soybeans saw two consecutive gap higher opens to start the week and saw nice gains as wet weather is the main driver. Recent rains have put states even further behind intended planted acres, and this week doesn't look like much more progress will be done until later in the week, if at all. There is still time to get soybeans planted, but the further you get into June the less yield potential you have. Talk about planted acres will be all the rage for the next couple weeks as many farmers have to decide whether to plan on prevented planting acres or trying to get as many acres planted as they can in mostly poor conditions.
The USDA has been no help with this decision making as details of the Market Facilitation Program aid payment have not been released and nobody knows when details will be released. The USDA is hinting it is being vague on details to keep from swaying planting decisions one way or the other.
There were still about 60 million acres of soybeans yet to be planted in the U.S. as of May 27. U.S. farmers only planted 10% of the soybean crop this past week and plantings are at the slowest pace on record. Not much field work was happening until late in the week after Memorial Day, and even progress then was limited with rains across the Midwest. Soybeans planted for the week ending May 27 was 29% complete versus 74% last year and 66% for the five-year average. The trade was expecting 28-30% planted. The slowest pace on record for this time of year was in 1983 and 1990, at 25% planted. Only one state (North Carolina) out of the 18 states the USDA surveys is ahead of the five-year pace.
Support also came from news that the funds barely shrunk their short positions this past week after having set a record for short contracts for four consecutive weeks. The managed funds only liquidated 16,000 net short positions and were at 153,000 contracts net short as of May 21.
The contract low of $8.155 set on May 13 recovery is support. The front month contract July low of $7.91 set on May 13 is the lowest futures price since $7.76 that was set in December 2008. This is now major support.
November soybeans broke through the 50-day moving average of $8.95. The 100-day and 200-day moving averages of $9.23 is next resistance. Major resistance is looking like $9.3125 on the weekly charts. On the daily charts, resistance is $9.34 and then the 10-month high of $9.71 for new crop soybeans that was set on Dec. 12. November soybeans were up 57.5 cents for the week ending May 30.
For the week ending May 30, July canola futures were up $14.70 at $459.10 Canadian per metric ton. The July Canadian dollar was down .0038 at 0.7411. This brings the U.S. price to $15.43 per hundredweight.
• Velva, N.D., $15.51 per hundredweight, June at $15.24.
• Enderlin, N.D., $15.58 per hundredweight, June at $15.58.
• Hallock, Minn., $15.62 per hundredweight, June at $15.29.
• Fargo, N.D., no bid, July at $15.45.
Cash feed barley bids in Minneapolis were at $3.25, while malting barley received no quote. Berthold, N.D., bid is $2.75 and CHS Southwest New Salem, N.D., bid is $3.
Cash bids for milling quality durum are $4.50 in Berthold and at $4.70 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $17.30. June bids were at $17.30.
For the week ending May 30, soybean oil was up 77 cents at $27.78 on the July contract.