GRABANSKI: Crop conditions favorable for big yield

Wheat
The Egyptian grain authority purchased 120,000 tons of wheat in its third tender for 2016 to ’17. With this tender, 600,000 tons have come from the Black Sea ports with roughly 50 percent sourced from Russia and 50 percent from Romania. Freight rates from these destinations to Egypt are very competitive, estimated at $8 per metric ton. France typically gets some of these orders this time of year but faced with lower quality wheat has purchased 55,000 to 60,000 metric tons from Romania. Estimates place the French wheat crop experiencing quality problems and the lowest yield since 1986 and 24 percent below the five-year average.
The Wheat Quality Council tour started last week. With the small grains crop a full week or more early, scouts have estimated 45.5 bushels per acre compared to 49.5 bushels per acre. Durum yield estimates for 2016 are 45.4 bushels per acre.
North Dakota has experienced above average-temperatures this summer, so the absence of bumper-type yields is not surprising. The five-year average for this tour is 45 bushels per acre. Last year’s second-day estimate came in at 49.3 bushels per acre. Protein levels are quoted as “all over the board” and inconsistent.
Australian farmers are not selling at these prices as they are hoping for some type of weather-related problem in the Americas. This reluctance to sell has pushed Australian prices to about $22.45 above Black Sea prices. Forecasts have been revised lower on Australian exports as the Black Sea export region is commanding the lead this season.
A number of central plains states have triggered Loan Deficiency Payments on hard red winter wheat in the past two weeks. Analysis indicates 6- to 11-cent LDP ranges in Kansas, Nebraska, Missouri, Iowa and Texas over the past two weeks. The northern tier states of North Dakota and South Dakota, Minnesota and Montana have been within 1-to 14-cents of triggering LDP payments on winter wheat during the same time period.
Weekly export sales for all wheat came in at 18.6 million bushels, all for the 2016 to ’17 marketing year. Weekly shipments of 20.2 MB were above the 18.3 MB needed in this week’s report to keep pace with U.S. Department of Agriculture projections. Primary destinations included Japan, Chili, Brazil and Taiwan. Inspections for this marketing year total 134.3 million bushels and are up 29 percent from the previous year. This is above USDA’s projected demand of a 19 percent increase, and should be considered a friendly number.
The July 25 crop progress report pegged winter wheat harvest at 83 percent complete compared to 82 percent last year and 79 percent average. Only Pacific Northwest states of Idaho, Oregon, Washington and Montana are less than 35 percent complete but are all within the five-year average norms. Spring wheat conditions are rated at 68 percent good to excellent (down 1 percent from the previous week) and 8 percent poor to very poor (up 1 percent). Last year was 71 percent good to excellent, and 7 percent poor to very poor.
For the week ending July 28, September contracts for Minneapolis wheat were down 10.5 cents at $4.86, down 15 cents at $4.10 for Chicago wheat, and down 10 cents at $4.09 for Kansas City wheat.
Corn
Corn started off the new week under pressure, as weather has been favorable for corn maturity and the trade was expecting another good crop conditions report. July 25 once again showed no declines in crop conditions ratings. This, combined with non-threatening weather, did not bode well for prices this week. Non-threatening near-term weather continues to leave the corn market under pressure. Corn prices were also under pressure, as rains fell in the eastern Midwest, bringing much needed rains to Ohio and other dry areas.
Last week’s temperatures have been mild for this time of year and are helping crops continue to mature in good condition. The extended forecast is drier for the week, so some crop stress is still possible, but it is late in the year so the damage would be from the top end yield estimates. The trade might wait for this hot dry weather to actually happen, as the other scares in the extended forecasts this year have not really come to fruition.
As of close July 28, September contracts were down 3.75 cents for the week to $3.31. December contracts traded down 3 cents for the week to $3.38. Minneapolis cash bids were down 19 cents for the week to $3.09.
After pushing below the September 2014 lows of $3.48 the previous week, we have had a few closes around unchanged, and it has not yet tested the next support of $3.20.
USDA announced 2.9 million bushels of old-crop corn and 6.8 million bushels of new-crop corn were sold July 27 to unknown destinations. The U.S. Energy Information Administration also said ethanol production dropped from 1,029,000 to 998,000 barrels per day the previous week, but it’s still a good number. The good news was that ethanol stocks dropped from 21.2 million to 20.4 million barrels, showing demand is strong and is being helped by cheap gasoline prices.
The July 25 crop report has corn silking at 79 percent, compared to 70 percent average and 56 percent the previous week.
Corn conditions did not change from last week. Good to excellent is at 76 percent, fair is at 19 percent and poor to very poor is at 5 percent. This compares to 70 percent good to excellent last year and 9 percent poor to very poor.
Export inspections came in at 51.4 million bushels, another nice number for this summer. Inspections for 2015 to ’16 total 1.537 billion bushels, down 3 percent from a year ago and below USDA’s projected demand increase of 2 percent. Export sales came in at 36 million bushels, with 17.3 million bushels for the 2015 to ’16 marketing year.
Soybeans
Daily weather runs are becoming less influential on traders as August approaches. Removing rain from the six- to 10-day forecast mid-week had little effect on market direction. We are a full week early, based on crop condition ratings, on blooming and pod-setting, and the market appears to be more concerned with demand factors. For now we are range bound between $9.40 and $10.40
One large factor, other than weather, was the speculation on China’s soybean reserve auction. In mid-July, China auctioned 300,400 metric tons of soybeans from its temporary reserve in an attempt to ease tight domestic supplies.
China sold 84,367 metric tons of soybeans from state reserves from the 2012 to ’13 crop year. This was only 14 percent of the 600,000 metric tons that was offered. This weak demand for the reserves points to lower world prices for higher quality new crop. Data indicates that 2.7 million metric tons of soybeans are set to arrive in September, leaving a shortage of 3 to 4 million metric tons. As of mid-July, it is thought that China holds 5 million metric tons in temporary reserve.
The July 25 crop progress report mentioned no drop in soybean conditions at 71 percent good to excellent, unchanged week over week and up 9 percent year over year; 22 percent fair and 7 percent poor to very poor, unchanged week over week and down 4 percent year over year. Blooming was 76 percent, compared to the average of 66 percent, and setting pods was at 35 percent, compared to 26 percent average. These ratings remain the fourth-best in 30 years, and point to above-trend-line yields.
Weekly export sales totaled 24.9 million bushels, including a 0.1-million-bushel reduction for the 2015 to ’16 marketing year. Weekly export inspections were 25.7 million bushels (ending July 21), putting the market year total at 1.688 billion bushels. The marketing year total is running 6 percent behind last year’s pace and behind USDA’s projected demand decrease of 3 percent. USDA reported export sales to China of 131,000 metric tons, 65,000 metric tons for delivery this year. During the July 28 trade report, an export cancellation of 1,400 tons of old crop turned the markets lower.
For the week ending July 28, August soybeans were down 3 cents to $10.03 and the November contract was down 10.25 cents to $9.78.
Canola
For the week ending July 28, Canola July futures in Winnipeg, Manitoba, traded down $0.30 (Canadian) to $451.20 per metric ton (Canadian). The Canadian dollar was trading at 0.7601. This brings the U.S. price to $15.56 per hundredweight.
Cash bids in Velva, N.D., were $15.38 per hundredweight for July and $14.69 for September. Enderlin, N.D., bids were $15.72 for July and $15.10 for September. Hallock, Minn., bid $15.47 for July and $14.65 for September. Fargo, N.D., bids were $15.80 for June and $15.15 for September.
Canola was slightly lower last week as weakness in soybeans and improving conditions in the Western plains of Canada weigh on this market. Weather conditions across North America have been good for the development of oilseeds. Canola has been closely resembling the soybean trade as of late.
Barley
Cash feed barley bids in Minneapolis were $2.35, while malting barley received to quote. Berthold, N.D., showed bids of $2 and CHS Southwest bid $2.50 in New Salem, N.D.
As of July 24, U.S. barley conditions stayed the same as last week, as they were 73 percent good to excellent (down 1 percent week over week, up 2 percent year over year) and 4 percent poor to very poor (unchanged week over week, down 2 percent year over year). Barley is headed at 89 percent, compared to 92 percent last year and 68 percent for the five-year average.
Durum
Cash bids for milling quality durum are $5.75 in Berthold, N.D., and at $5.80 in Dickinson, N.D.
Stats Canada estimates durum plantings at 6.10 million acres up 4.8 percent from 2015. USDA reported durum plantings at 2.15 million acres up 11 percent from last year. 
Sunflowers
Cash sunflower bids in Fargo, N.D., were at $16.95 for June and $17.55 October to December.
As of close on July 28, soybean oil traded to $29.59 on the August contract.