The wheat market finally saw some buying this week after heavy deliveries pushed contracts to multi-year lows. Based on longer term nearby monthly continuation charts, the Kansas City market hit its lowest point since January 2006 and Minneapolis hit its lowest point since September 2009. For reference, the same continuation charts showed the U.S. dollar trading around $89 in January 2006 and $77 in September 2009.
Matif wheat futures also set new contract lows at $158.25 per metric ton for September. The U.S. dollar set a new contract high of $99.33. On the charts, the $98 level would be considered support with resistance now at $99.33.
Wheat export inspections were in line with expectations at 526,000 metric tons (19.3 million bushels). Cumulative exports of 241 million bushels are running 25% ahead of last year's pace. Spring wheat harvest is 55% complete compared to 78% average. Spring wheat conditions declined 2% to 67% good to excellent. North Dakota experienced showers over the Labor Day weekend.
Stats Canada will issue its quarterly grain stocks report Sept. 6. Wheat stocks are anticipated to be 5.2 million metric tons for the period ending July 31. This compares to 5.9 million metric tons last year. Trade guesses range from 4.2 million to 6.3 million metric tons. The Canadian dollar was very erratic this week dropping to .7473 before blasting higher to .7582 before retreating. For now the .7500 level seems to be holding.
There was a report out by Reuters stating that Australia's wheat crop estimates could decline by more than 10% due to ongoing drought. The U.S. Department of Agriculture's current estimate is 21 million metric tons, but there are some estimates that it could match last year's short crop of 17.3 million metric tons. Argentina released its first estimate of its recently planted wheat crop at 21 million metric tons, slightly above USDA's current 20.5 million metric tons estimate.
For the week ending Sept. 5, September contracts for Minneapolis wheat were up 8 cents at $4.845, up 12.75 cents at $4.64 for Chicago wheat, and up 3.75 cents at $3.82 for Kansas City wheat.
FC Stone estimates U.S. corn yield at 168.4 bushels per acre, up 1 bushel from its previous estimate. They estimate 13.809 billion bushels of production. Allendale estimates a 13.755 billion bushel crop compared to USDA's current estimate of 13.901 billion bushels. The International Grains Council increased global corn crop size by 8 million metric tons to 1.1 billion bushels.
Brazil reports August exports of corn at 7.653 million metric tons, up 171% from last August's total of 2.826 million metric tons. U.S. weekly export inspections were below expectations at 14 million bushels. Inspections are running 18% below last year's pace. Corn sales are tracking roughly 50% below last year. The lack of demand bears are currently in control of pushing prices lower.
Weekly ethanol production declined sharply to 7.091 million barrels, 6.81% lower than last year and a 21-week low. This puts implied use of corn for ethanol down 8% from the previous year as the marketing year concludes or 5.365 billion bushels versus the USDA estimate of 5.425 billion bushels. Stocks as of Aug. 30 were 23.801 million barrels, up 4.84% versus last year. Ethanol stocks are at record high levels for the late August timeframe. U.S. gasoline calendar year demand is tracking 0.2% below the previous year.
Weather forecasts are showing a warmer 16 to 30 day pattern. In the shorter term, Hurricane Dorian seems to have pushed or at least shielded any colder air from coming into a majority of the Corn Belt. The weather bulls are nowhere to be found, as delayed maturity is losing its argument based on warmer forecasts and non-threatening frost in the near term forecasts. Corn at the dough stage is 81% versus 93% normal. Corn dented is 41% versus 63% normal. Corn mature is at 6% versus 13% normal. Corn conditions improved 1% as the trade was expecting.
With the recent sell off in corn futures, we have seen a widening of the price spread for E85 under E10 to 49 cents in the Fargo, N.D., market. The spread was running 35 to 40 cents for much of the spring and summer. The spread has also widened from premium 91 octane to E10 to 50 cents under after being 40 cents under for much of the past year. Unleaded 88 octane (E15) has consistently run a nickel under 87 octane (E10) through this entire timeframe.
Soybean futures started off the holiday-shortened week with some decent gains, but gave them all back on Aug. 5. China and the United States have agreed to hold high-level talks in early October in Washington, but that didn't give the market a boost. There is not much optimism that the two sides will be able to come to an agreement as both sides continuing to say their economies will be fine if they don't come to an agreement. With the world's eyes on these trade negations, neither side wants to appear weak and that they have given up too much if they come to a deal.
Enrollment for Agricultural Risk Coverage and Price Loss Coverage is now open for 2019. Enrollment is open for the 2019 crop year and farmers have until March 15, 2020, to sign up. Farmers can enroll for the 2020 crop year starting Oct. 7 through June 30, 2020. USDA announced if you wait until Oct. 7 for signup, you can enroll in both the 2019 and 2020 crop years. If you signed up for a supplemental coverage option crop insurance policy, you have to sign up for PLC for that crop.
As of Sept. 1, 14% of the U.S. soybeans still haven't set a pod, which is more than 10 million acres. 4% of the nation's soybeans weren't even blooming by Sept. 1 and we are now in September with cool temperatures.
Crop ratings were unchanged at 55% good to excellent compared to 66% good to excellent last year. The crop is rated 32% fair and 13% is rated poor. Average analyst estimates were expecting steady conditions to an increase of 1%.
A few private firms came out with updated estimates this past week. INTL FC Stone puts the soybean crop at 3.661 billion bushels with a 48.3 bushels per acre yield. Allendale puts the soybean crop at 3.499 billion bushels with a 46.1 bushels per acre yield.
The funds have been steadily net short in soybeans since June 2018, when the trade war started. As of Aug. 27, the funds were net short 76,000 contracts, 4,000 more than the week prior.
Major resistance is at $9.3125 on the weekly chart. On the daily charts, resistance is $9.365 and then the five-month high of $9.48 for new crop soybeans that was set June 18. November soybeans are still trending downwards and filled the trade gap that was made in May. This gap was at $8.58 to $8.645 set May 25. New support is $8.525 that was the recent low set on Aug. 28. The November contract low of $8.155 set May 13 recovery is major support after this.
For the week ending Sept. 5, November canola was down $2.70 and was at $445.30 Canadian per metric ton. The Canadian dollar was at 0.7557. This brings the U.S. price to $15.27 per hundredweight.
• Velva, N.D., $14.05 per hundredweight, November at $14.23.
• Enderlin, N.D., $14.06
• Hallock, Minn., $14.41 per hundredweight, November at $14.75.
• Fargo, N.D., $14.40 per hundredweight, November at $14.50.
Cash feed barley bids in Minneapolis were at $3, while malting barley received no quote. Berthold, N.D., bid is $2.75 and CHS Southwest New Salem, N.D., is at $3.
Cash bids for milling quality durum are $4.50 in Berthold and $4.60 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $18.30. October bids were at $17.40.
For the week ending Sept. 5, soybean oil was down 18 cents at $28.46 on the October contract.