Grabanski: Markets quiet on holiday week
Wheat Wheat traded mixed last week. Winter and spring wheat ended with gains, while Chicago slipped lower, for the third straight week. Position squaring ahead of Thanksgiving and the realigning of spread prices between wheat classes seemed to be...
Wheat traded mixed last week. Winter and spring wheat ended with gains, while Chicago slipped lower, for the third straight week.
Position squaring ahead of Thanksgiving and the realigning of spread prices between wheat classes seemed to be the main feature. For the week ending Nov. 25, December Minneapolis wheat was 5 cents higher, Chicago wheat was 9.25 cents lower and December Kansas City gained 0.25 cents, after hitting a new weekly low.
All three wheat exchanges started the week on the same page, opening steady to slightly lower but rallied to end with gains. Selling was tied to spillover pressure from corn and soybeans, which were lower early in the session. By midsession, all of the grains had shaken off selling pressure and started to firm. Strength seemed to come from technical buying, as wheat traded to the $5 support level. The holiday season usually brings light trading into the grains.
The Nov. 24 session saw wheat trade on the defense, with most months ending lower. Selling spilled over from the Nov. 23 crop progress report, which showed another week of improving conditions. Most of the major wheat-producing states picked up decent rains the past few weeks, and that has helped improve the condition of wheat before it enters dormancy.
Additional pressure came from position-squaring ahead of Thanksgiving.
Wheat traded on both sides of the fence Nov. 25, but never went anywhere. Trading was light, with much of the activity focused on position squaring ahead of Thanksgiving.
Wheat was under the influence of spread trading, as most traders try to bring the classes of wheat back in line with each other. The winter wheat exchanges did see pressure from weather forecasts, which called for rain.
For the week ending Nov. 22, the U.S. Department of Agriculture estimated wheat’s export shipments pace at 9.97 million bushels. The wheat export sales pace was estimated at 11.2 million bushels. Shipments need to average 16.1 million bushels, and sales need to average 10.5 million bushels to make USDA’s export pace of 800 million bushels.
As of Nov. 22, 96 percent of the nation’s winter wheat crop was planted, compared with 94 percent the previous week and 100 percent for the five-year average.
Emergence is estimated at 90 percent, compared with 87 percent the previous week, and 90 percent for the five-year average. Winter wheat’s crop condition rating improved 1 percent to 53 percent good to excellent, 37 percent fair and 10 percent poor to very poor.
The corn market was quiet during this holiday week. Pressure came from the dollar trading to an eight-month high, and talk of relief for Argentina farmers from export taxes, which could put more corn on the market. Support came from a better-than-expected export sales report, but shipments continue to lag. The ethanol report also showed a record for production. As of Nov. 27, December was down 3 cents for the week.
Corn opened lower Nov. 23, but firmed to close slightly higher. Early pressure came from talk that Argentina’s newly elected president will eliminate the country’s 20 percent export tax on corn.
This news led to discussion about basis levels, which are plus 45 cents in the eastern U.S. because of Argentina’s lower production, which could ultimately increase imports for corn on the East Coast. Soybeans also posted a 6.5-year low, but they firmed into the close, taking corn with it. The monthly cattle-on-feed report showed total numbers up 2 percent, compared with one year ago, which should increase feed demand moving forward.
The Nov. 24 session saw selling return, which, in turn, had corn giving back most of the Nov. 23 gains. The export inspections were disappointing, running 23 percent behind one year ago. Also, China’s October distillers grains imports were down 29 percent from September. The dollar also traded to an eight-month high, and the lack of export demand news added weakness, while stocks are adequate in the U.S. and world. The corn market closed slightly higher Nov. 25, with an ethanol report that showed higher production, and the largest production per day on record. Stocks also grew, and ethanol continues to trade at a premium to unleaded gasoline. Corn was lower Nov. 27, with weak economic data from China and a firm U.S. dollar.
Ethanol production for the week ending Nov. 20 averaged 1.008 million barrels per day, up 3.38 percent from the previous week. Total ethanol production for the week was 7.056 million barrels. Corn used in production is estimated at 105.84 million bushels, and needs to average 98.78 million bushels per week to meet this crop year’s USDA estimate of 5.175 billion bushels. Stocks were 19.627 million barrels, up 1.96 percent compared with the previous week, and up 14.97 percent compared with last year.
USDA’s export inspections report was bearish for corn, at 19.5 million bushels, below the 38.6 million bushels needed to meet USDA’s projection. Corn export sales were estimated at 80.2 million bushels, and above the 28.7 million bushels needed to meet USDA’s estimate of 1.80 billion bushels for the year.
After trading to a new weekly low, soybeans recovered, ending the holiday-shortened week with gains. Strong demand was offset by concerns about whether the current export pace can be sustained. The export issue came even more into question with the election result in Argentina. For the week ending Nov. 25, soybeans gained 17.75 cents after trading to a new weekly low (and six-year low).
Soybeans started the week with double-digit losses in the overnight and morning sessions, but rebounded at midday to close higher. The early morning sell-off was enough to drop soybeans to the lowest price since March 2009. Technical buying helped the market rebound from those lows once major support lines were hit.
There was a knee-jerk reaction early in the session from news that Argentina’s new president will lower export taxes for grains, and Argentina farmers have waited to sell grain until election news. The Nov. 24 session saw the market trading thin as it looks for direction. Argentina export taxes were the talk, with a lack of other news during the shortened Thanksgiving week. We will see how much the Argentina news affects U.S. exports once Argentina implements its tax plan when Mauricio Macri takes office Dec 10. South American weather reports have been spotty, but the forecasts are favorable for Brazil and Argentina. Soybeans returned to positive territory Nov. 25. A new soybean export sale and news about export taxes in Argentina helped support the market. USDA announced a sale of 190,000 metric tons of 2015 and ’16 soybeans to an unknown destination.
Additional support came as Argentine president elect Macri said there would be no holiday on soybean export taxes. That is a change from the talk earlier in the week. The 5 percent decrease in bean export taxes each year is still on the table. The upside is still limited in grains, as the U.S. dollar index climbed over the 100 point mark.
For the week ending Nov. 22, USDA reported the soybean export inspections pace at 68.1 million bushels. The soybean export sales pace was estimated at 43.1 million bushels. Shipments need to average 26.3 million bushels and sales need to average 13.4 million bushels to make USDA’s export pace of 1.715 billion bushels.
For the week ending Nov. 22 USDA reported last week’s barley export shipments pace at 29,212 bushels, with 22,506 bushels going to Japan and 6,706 bushels going to Korea. No barley exports sales were reported. Nov. 25 cash feed barley bids in Minneapolis were at $2.60 per bushel, while malting had no offers.
USDA reported no durum export shipments or sales. This brings the year-to-date export sales pace to 20.6 million bushels, compared with 16 million bushels last year at this time.
Nov. 25 cash bids for milling quality durum were at $6.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $6.75 per bushel.
Canola futures on the Winnipeg, Manitoba, exchange closed the week with $3.10 (Canadian) gains. Canola started the week on the defense, but pushed higher Nov. 24 and 25. The Nov. 25 cash canola bid in Velva, N.D., was $14.26 per hundredweight.
As of Nov. 15, 88 percent of nation’s sunflower crop was harvested, compared with 88 percent the previous week and 84 percent for the five-year average.
For the week ending Nov. 22, USDA estimated the export sales pace for soybean oil at 12.8 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 493.1 thousand metric tons, compared with 322.8 thousand metric tons last year.
Nov. 25 cash sunflower bids in Fargo, N.D., were $17 per hundredweight.