GRABANSKI: Continued weather concerns for crops
WheatWheat had a rough week, sliding lower as a result of the U.S. Department of Agriculture's Supply and Demand report on June 10 and favorable crop condition ratings. The report projected a record hard red winter wheat yield of 50.5 bushels per...
Wheat had a rough week, sliding lower as a result of the U.S. Department of Agriculture’s Supply and Demand report on June 10 and favorable crop condition ratings. The report projected a record hard red winter wheat yield of 50.5 bushels per acre.
Projected hard red winter wheat production is at 1.51 billion bushels, up 10 percent from the 2015 crop. Hard red winter wheat was pegged at a surprising 938 million bushels, up 9 percent from last month. That was 28 million bushels above any of the pre-report estimates.
For 2016 to ’17, U.S. wheat ending stocks were pegged at 1.050 billion bushels with pre-report estimates between 1.007 billion to 1.188 billion bushels. This is up from 1.029 billion bushels in the May report. The 2015 to ’16 U.S. wheat stocks were at 980 million bushels (953 million to 1,003 million bushels), up from May’s 978 million bushels. The 2016 to ’17 world stocks came in at 257.8 million metric tons (255 million to 261.43 million bushels), up marginally from the May report. The 2015 to ’16 world stocks came in at 243 million metric tons, which is right where it was expected, up marginally from the May report. USDA estimates a price range for $3.60 to $4.40 per bushel in the 2016 to ’17 marketing year.
Winter wheat harvest is in full swing with a number of reports of 60-bushel-per-acre yields in Kansas. Reports also state lower protein levels in the 10.5 to 11.5 range with higher yields. Current deferred wheat spreads are widening from 6.25 to 9.25 cents showing an incentive for storage as basis levels continue to be dismal. Lower protein concerns have also come out of France and Britain who have been experiencing wet conditions.
The June 13 crop progress report showed hard red winter wheat heading is 96 percent, compared to 95 compared to last year and 89 percent average. Winter wheat harvest is 11 percent complete compared to 9 percent last year and 18 percent average. Texas is 35 percent complete (39 percent last year, 43 percent average), Oklahoma is 34 percent complete (31 percent last years, 52 percent average), and Arkansas 45 percent (31 percent last year, 46 percent average).
Spring wheat conditions are rated at 79 percent good to excellent (unchanged) and 2 percent poor to very poor (unchanged). Last year was 70 percent good to excellent and 4 percent poor to very poor. These conditions are substantially better than last year and the five-year average.
It is important to note that money managers continue to hold a heavy net short position in wheat. This shows a bearish sentiment from managed money regarding the Wheat complex.
For the week ending June 16, July contracts for Minneapolis wheat were down 24.5 cents at $5.29, down 37.75 cents at $4.72 for Chicago wheat, and down 33.5 cents at $4.50 for Kansas City wheat.
Corn started off last week with a couple of days with gains, but fell off in the middle of the week to give up most of the early week gains. Corn got support from hot and dry weather during the weekend throughout much of the Corn Belt. The weather forecast seems to change every day, but the increased possibility for hot weather in the near term has these markets on edge.
Rain potential has increased in the last forecast for the week, as well, with average rains expected across much of the Corn Belt. It’s expected to be cooler across the eastern Corn Belt, while areas of the western Corn Belt are expected to see warmer temperatures. For the week ending June 16, July corn was up two cents and December corn was up five cents.
The June 17 Commodity Futures Trading Commission data showed noncommercial net longs in corn at 327,515 as of June 7, the most since December 2012.
Corn remains in an upward trend higher with support from non-commercials and increased demand the past two months. Even though there is still plenty of uncertainty about the size of the next U.S. corn crop, noncommercial investors are still appearing to be leaning toward the bullish side. The December contract made new highs to $4.48 on June 15, but backed off quickly and didn’t hit that mark again the rest of the week.
Weekly ethanol production increased by 7,000 barrels last week to 1.013 million barrels. This is the highest production level ever, which increased stocks, but we are still below the large stocks we saw at the beginning of the year.
Corn emergence is at 96 percent compared to 94 percent average and 90 percent the previous week. Crop conditions are in their second week. Corn conditions are close to last year at this time. Good to excellent is at 75 percent, fair is at 21 percent, and poor to very poor is at 4 percent. This shows that a lot of corn around the country has gotten to a good start like it did last year. The crop conditions are close to last week, and slightly better than last year.
Export inspections came in at 66.8 million bushels, double from last week. Shipments now total 1.227 billion bushels, down 8 percent from last year. We are still behind what is needed to meet USDA estimates, but have gained ground in the past month or so. Weekly export sales of corn showed a total of with 35.8 million bushels for the 2015 to ’16 marketing year. This was well above the 5.5 million bushels needed to be on pace with USDA’s revised June demand projection of 1.825 billion bushels.
It was a difficult week for the soybean market. After last week’s supply and demand report came out decidedly bullish but failed to make waves in the market, it appeared that funds were ready to start profit-taking. With July options expiration and the June 30 planted acres report approaching, funds seem to be easing their long positions.
The market began the week by trading a mere penny shy of $12 but by June 16 prices were around in the $11.20 to $11.35 range. Midweek selling did most of the damage. Improving forecasts were identified as the catalyst for selling. Further pressure was brought on when soymeal and soyoil both saw heavy selling, as well.
The U.S. dollar played both sides of the market, trading significantly lower one day and higher the next. The FOMC left interest rates unchanged this week, as expected, but the upcoming Brexit vote is pushing some funds to the US.
The NOPA May crush numbers released midweek were better than expected with the soybean crush at 152.8 million bushels compared to 148.4 last year, setting a record high for any month. Soyoil stocks were 1.994 billion prounds, also better than expected. Soymeal exports were reported at 682,500 metric tons. Despite this, soybeans finished the day more than 10 cents lower in all 2016 months traded on release day.
Informa is now estimating an increase from March’s 82.2 million acres to 83.8 million acres on the June acreage report. They had initially predicted only a 0.75 million acre increase but are now expecting a 1.6 million acre increase. Apart from Informa it has long been expected that soybeans would receive extra acres and a 1 to 2 million acre increase was the number floating around.
The June 13 crop progress report stated, as of June 12, soybean planting was 92 percent complete compared to 87 percent average. Emergence was 79 percent compared to 72 percent average and 72 percent last year. Conditions were 74 percent good to excellent (more than 2 percent week-over-week, more than 7 percent year-over-year) and 4 percent poor to very poor (unchanged week-over-week, down 2 percent year-over-year).
Export sales were excellent at 816,400 metric tons for 2015 to ’16, the best week since January 14, 2016. Total commitments are now 49.27 million metric tons compared to USDA’s projection of 47.9 million metric tons. Export inspections were on poor side, coming in at 5 million bushels, below last year’s 8.3 million bushels. Total shipments now total 1.604 billion bushels. USDA is projecting 1.760 billion bushels in exports this year.
For the week ending June 16, the July contract was down 43.75 cents at $11.34. New-crop November contracts traded down 43.50 cents at $11.19.
Canola futures, as of June 16 were down $14 (Canadian) for the week at $509.50 per metric ton (Canadian) for the July contract. The Canadian dollar fell 0.0120 at 0.7715. This brings the U.S. price to $17.83 per hundredweight, an 81-cent loss for the week.
Cash bids in Velva, N.D., were $17.82 per hundredweight for June and $17.14 for September. Enderlin, N.D., bids were $17.99 for June and $17.25 for September. Hallock, Minn., bid $17.69 for June and $17.13 for September. Fargo, N.D., bids were $18.51 for June and $18 for September.
Canola struggled last week as the soybean complex traded lower and lower. Continued good weather pressured the market, as well. A weaker Canadian dollar did offer some support, but ultimately the selling in related markets was too much to overcome.
Cash feed barley bids in Minneapolis were $2.35, while malting barley received to quote. Berthold, N.D., showed bids of $2.25 and CHS Southwest bid $2.70 in New Salem, N.D.
As of June 12, emergence was 95 percent compared to 89 percent average and 100 percent last year. Conditions were 78 percent good to excellent (unchanged week-over-week, up 3 percent year-over-year) and 1 percent poor to very poor (unchanged week-over-week, down 2 percent year-over-year).
Cash bids for milling quality durum are $6.25 in Berthold, N.D., and unchanged at $6.25 in Dickinson, N.D.
Cash sunflower bids in Fargo, N.D., were at $17.30 for June and $18 October to December.
Soybean oil traded down $1.60 last week to $31.16 on the July contract.
As of June 12, planting was 78 percent complete compared to a 61 percent average. North Dakota is 93 percent complete compared to 73 percent average. South Dakota is 68 percent complete compared to 52 percent average.