GRABANSKI: It’s a wild ride for soybeans
WheatIt was a short week for trading and a good week for wheat. Early losses were reversed during the remainder of the week, allowing for small gains to sneak in. The initial losses came as forecasted rains in Kansas and Oklahoma didn't develop a...
It was a short week for trading and a good week for wheat. Early losses were reversed during the remainder of the week, allowing for small gains to sneak in.
The initial losses came as forecasted rains in Kansas and Oklahoma didn’t develop as expected.
Wheat traded down, as moisture damage to the winter wheat crop became less likely with harvest quickly approaching. But, as the week went on, rains did accumulate in Texas and southern Oklahoma where the harvest is just underway, supporting the wheat market. Market commentaries acknowledge these supporting factors, but are quick to add the caveat that world production is still looking healthy with no weather problems on the horizon.
Faced with high stocks and strong production expectations, wheat is struggling to shake off the market’s bearish attitude toward it.
The U.S. dollar lent pressure to the initial losses, but changed its tune midweek. It unexpectedly lost 40 points June 1 and June 2 saw only partial recovery.
Further support entered the wheat market from the outside as soybeans saw significant gains midweek.
The crop progress report, released after trade closed May 31, pegged winter wheat conditions at 63 percent good to excellent (a 1 percent increase) and 8 percent poor to very poor (unchanged). Heading is at 84 percent nationally compared to 75 percent the previous week and 76 percent average.
The spring wheat condition is 79 percent good to excellent and 2 percent poor to very poor (unchanged), above last year’s 71 percent good to excellent, 4 percent poor to very poor. Emergence is 88 percent compared with 78 percent the previous week and 66 percent average.
The marketing year for wheat is winding down - we only have one more week of reports - and it has been evident for some time that wheat is not going to meet U.S. Department of Agriculture’s 780-million-bushel export projection.
Last week’s export sales of 3.95 million bushels brought total commitments up to 761 million bushels, 2.4 percent behind the projection and 10.4 percent behind last year’s exports. Export inspections were stronger at 16.3 million bushels, but total shipments are still only 737 million bushels.
For the week ending May 2, July contracts for Minneapolis wheat were up 4.25 cents at $5.32, up 4 cents at $4.85 for Chicago wheat, and up 4.75 cents at $4.64 for Kansas City wheat.
Corn started off the week slow, then gained back its losses on June 1 and 2 to end a couple cents higher for the week.
Crop conditions and planting progress showed a good start to the year in most parts of the country. The trade was also looking at a yield-friendly crop rating last week, but still found some strength with good exports and troubles with Brazil’s second crop corn.
Weather was more clear last week, which should allow for better crop development going into June and finishing up some late plantings.
For the holiday-shortened week ending June 2, July corn was up 2.5 cents in July and up 3.25 cents in December.
Increased export business here in the U.S., which is tied to Brazil’s stretch of dry weather, has been bullish. Commercial buying continues to lift prices, helped by U.S. Gulf prices that are about 35 cents cheaper than Brazil’s corn. South American farmers are more interested in selling to foreign buyers as it is more profitable to them with a declining currency, but even with that, Brazil is expected to cut corn exports for 2016 to 23 million metric tons from 30 million metric tons for April.
The U.N.’s monthly Market Monitor estimated 1.027 billion metric tons (42 billion bushels) of corn production for 16 to 17, but also expects that to be 2 million metric tons shy of total use. That is similar to USDA’s May estimates and is neutral for corn prices.
The crop progress report pegged corn plantings up 8 percent from the previous week at
64 percent, which is also 2 percent above the five-year average. Indiana and Ohio were both well behind pace the previous week but the gains they made this last week show how fast farmers can get stuff planted these days. All the main corn producing states are at or ahead of the planting progress pace.
Corn emergence is at 78 percent compared to 75 percent average and 60 percent the previous week. Crop conditions came out for the first time this year.
Corn conditions are close to last year at this time. Good to excellent is at 72 percent, fair is at 23 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.
We hit the target $11.16 July soybeans to price another 20 percent of 2015 old-crop soybeans on June 2.
Our next target we are looking at is $11.75 July, and $11.16 November soybeans.
Soybeans started off the week with some losses after trying to break through $11 May 30. After a nice weekend, traders looked at favorable weather and good planting progress to drive this market down a bit. The volatility continued last week, as concerns about Argentina’s bean crop and Brazil’s corn crop is still in the news.
The funds took over after that and drove this market up 65 cents the next couple days for old crop and around 25 cents for new crop.
Soybean meal found strength again this week and soy oil jumped on the train too.
For the week ending June 2, July soybeans were up 50 cents and new-crop November soybeans were up 10.25 cents.
Also U.S. Gulf bids were 44 cents cheaper than Brazil’s soybeans. Even after bearish news to start the week, the heavy long funds are keeping this market moving upwards. Planting progress is ahead of last year’s pace, and crops are getting a good start again this year.
The USDA crop progress report that came out June 1 would typically be viewed as a negative, but nobody seemed to notice as the funds did their thing.
A favorable start to the U.S. growing season does not seem to faze these funds at the moment.
On June 2, the United Nation’s monthly Market Monitor estimated 321 million metric tons (11.8 billion bushels) of world soybean production in 16 to 17, below the 330 million metric tons of expected use. This is a larger deficit than USDA projected and could draw down supplies in the US and South America.
The crop progress report pegged soybean planting at 73 percent complete compared with 66 percent average and 56 percent the previous week. This is ahead of the trade estimate of 70 percent planted. Emergence is 45 percent compared with 40 percent average.
Exports were weak considering the high prices for South American soybeans, as they only came in at 2.8 million bushels, just one-third of the previous week’s inspections and well behind this time last year. Shipments now total 1.588 billion bushels, down 8 percent from last year’s pace. USDA is predicting a 6 percent decrease to 1.74 billion bushels. Export sales came in 11.4 million bushels for the week ending May 26.
Canola futures, as of June 2 were up $8.50 (Canadian) for the week at $520.60 per metric ton (Canadian) for the July contract. The Canadian dollar fell 0.0058 at 0.7630. This brings the U.S. price to $18.02 per hundredweight, a 39-cent gain for the week.
Cash bids in Velva, N.D., were $18.01 per hundredweight for June and $17.35 for September. Enderlin, N.D., bids were $18.19 for June and $17.76 for September. Hallock, Minn., bid $17.88 for June and $17.31 for September. Fargo, N.D., bids were $18.28 for June and $17.65 for September.
Canola prices benefitted greatly from a surging soybean complex. Soybeans, soymeal and soybean oil put together a positive short-week. The Canadian dollar supported prices, as well, as it traded down. Improving weather in western Canada did put pressure on the gains, however.
Cash feed barley bids in Minneapolis were $2.40, 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 May 29, planting was 97 percent complete compared to 88 percent average and 100 percent last year. Emergence was 88 percent compared to 69 percent average and 92 percent last year. Conditions were 77 percent good to excellent and 1 percent poor to very poor (unchanged).
Cash bids for milling quality durum are $6.25 in Berthold, N.D., and unchanged at $6.00 in Dickinson, N.D.
Cash sunflower bids in Fargo, N.D., were at $16.75 for June and 17.60 October to December.
Soybean oil traded up 78 cents this week at $32.27 on July contract.
As of May 29, planting was 45 percent complete (67 percent in North Dakota), compared to a 24 percent average (32 percent in North Dakota), and is expected to plant 630,000 acres, a 2 percent increase, and south Dakota is expected plant 530,000 acres, a 9 percent decrease.