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Grabanski: USDA report uneventful

WheatAfter slipping lower for the first two session of last week, wheat managed to post decent gains during the back half of the week. Early selling resulted from position-squaring ahead of the U.S. Department of Agriculture's December World Agri...

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Wheat
After slipping lower for the first two session of last week, wheat managed to post decent gains during the back half of the week.
Early selling resulted from position-squaring ahead of the U.S. Department of Agriculture’s December World Agricultural Supply and Demand Estimates report, while gains late in the week came from technical buying. For the week ending Dec. 10, March Minneapolis wheat was unchanged, March Chicago wheat was up 11 cents and March Kansas City wheat was up 9.25 cents.
The first two sessions of the week had wheat closing with losses. Wheat started the week with gains, with support from commercial buying. Once the corn and soybean complexes came under pressure, the selling spilled over to push wheat into the red.
Additional selling was tied to USDA’s bearish export inspections estimate. A stronger dollar added to the selling pressure. Position-squaring ahead of the WASDE report was seen. Early estimates had wheat stocks (world and domestic) increasing slightly from November, from 911 million bushels to 918 million bushels in the U.S..
Selling was the main feature for wheat traders Dec. 8. Early selling was tied to weather forecasts that called for rain in much of the major winter wheat regions of the U.S.
Light selling came from expectations for a bearish USDA crop production estimate. Most expected another cut to U.S. wheat export demand and a slight increase in world production, because of the recent increase in Canada’s production.
The Dec. 9 session started on the defense, and continued to trade with small losses early, as traders squared up positions ahead of USDA’s crop production report. Traders were expecting the report to be negative for wheat. The report actually was a nonevent for wheat, as USDA left wheat’s U.S. numbers unchanged from November. Wheat’s ending stocks remained at 911 million bushels, which was 7 million bushels less than trade expectations.
As for the world estimates, USDA increase Canada’s wheat production, and that followed through with an increase in world ending stocks, now estimated at 229.86 million metric tons, compared with expectations of 226.43 million metric tons. In all, the report was a nonevent, and should be considered neutral to wheat.
Wheat shook off the bearish USDA export sales estimate and traded with gains. The market stumbled to start the session because of poor export numbers, but with most contracts at the low end of their trading ranges, it seems wheat is reluctant to move much lower.
Wheat will be looking for news to give it direction, and with the U.S. crop going into dormancy, the news will have to come from other countries. The strong dollar and approaching holiday season will likely put a damper on any big rally.
For the week ending Dec. 5, USDA estimated the wheat export shipments pace at 8.3 million bushels. The wheat export sales pace was estimated at 8.3 million bushels.
Corn
Corn drifted sideways with the lack of fresh news the main driver after the release of USDA’s report. Selling interest was limited, with strong export and ethanol reports. Demand will be watched as the year ends. Traders will closely monitor changes in Argentina’s export demand because of the new leadership in place. As of the Dec. 10 close, March corn was down 2.25 cents.
The Dec. 7 session opened lower and remained under pressure. Early weakness came from the negative outside markets. Crude oil, ethanol and gasoline were under pressure after news that OPEC raised its production quota (crude oil traded to a seven-year low). USDA’s export inspections came out at midmorning and were disappointing, running 25 percent behind one year ago. Traders will be watching for news from Argentina, as new leadership promises to eliminate the corn export tax.
Corn closed with small gains on Dec. 8 in a quiet trading ahead of the Dec. 9 USDA report.
Buying interest was limited, with crude oil trading at seven-year lows and pressure in the soybean trade. Report day Dec. 9 had corn closing unchanged. The December report is one of the least important reports of the year, and usually shows little change from November, and this report was just that.
USDA raised the U.S. corn ending stocks by 25 million bushels, cutting exports by 50 million bushels and increasing ethanol production by 25 million bushels. Some support came from the weekly ethanol report that showed production up and stocks down.
The Dec. 10 session had corn winning, as the market ended with decent gains. Support came from a decent export sales report. A large portion of sales were to unknown destinations, and that has traders wondering if China is back in the market.
Ethanol production for the week ending Dec. 4 averaged 993,000 barrels per day, up 3.87 percent from the previous week. Total ethanol production for the week was 6.651 million barrels. Corn used in production is estimated at 104.27 million bushels and needs to average 98.597 million bushels per week to meet this crop year’s USDA estimate of 5.175 billion bushels. Stocks were 19.829 million barrels, down 0.84 percent, compared with the previous week and up 11.71 percent, compared with last year.
For the week ending Dec. 5, USDA’s export inspections report was bearish for corn at 19.4 million bushels, below the 39.3 million bushels needed to meet USDA’s projection. Corn export sales were estimated at 43.2 million bushels, and above the 27.2 million bushels needed to meet USDA’s estimate of 1.75 billion bushels for the year.
Soybeans
Selling from a favorable weather forecast in Brazil dragged the soybean market down to start the week. South American weather and soy product demand will be the news that matters until the important Jan. 12 WASDE report. Progressive Ag expects increases in yield and production. For the week ending Dec. 10, soybeans were down 27.75 cents.
Selling started the week, as soybeans took a big hit Dec. 7. Pressure came from a stronger dollar index and weak oil prices. Crude oil was down more than $2, and the dollar index was higher. Soy oil, which was leading the charge for higher soybean prices in past weeks, suffered large losses after gaining more than $3. South American weather was a negative for the market, as central Brazil and Argentina received rain, and more is expected. 
Soybeans continued into negative territory Dec. 8. as there was no positive news to start the week.
Positioning ahead of the crop production report was seen. Analysts have also become less confident on the passage of a producer credit for biodiesel, which will replace the blender credit now in place. A $1 credit will switch to a producer credit, and keep more foreign producers from benefiting from this credit.
Soybeans started Dec. 9 higher, but went into negative territory after the report was released, and then clawed back to end the day unchanged. The late session recovery came from a sharply lower U.S. dollar. U.S. ending stocks were unchanged, and world stocks declined slightly, but only by 0.28 million metric tons. There really was nothing in the report to change the fundamental story for soybeans.
The lack of news for soybeans resulted in a quiet close to the week. After closing unchanged after the report, soybeans could not find strength, and managed to end with small gains. The weekly export sales report showed strong demand for the soybeans. The exports report and a new sale reported for 120,000 metric tons to an unknown destination also help keep soybeans in positive territory.
For the week ending Dec. 5, USDA reported soybean export inspections at 63.2 million bushels. The soybean export sales pace was estimated at 53.4 million bushels. This is ahead of the pace need to meet USDA estimates.
Barley
For the week ending Dec. 5, USDA reported the barley export shipments pace at 22,506 bushels.
USDA made a few minor adjustments to barley’s supply and demand estimate. In the report, USDA cut barley imports 1 million bushels, and decreased exports by 2 million bushels. The result was a 1-million-bushel increase in barley ending stocks, now estimated at 97 million bushels.
The Dec. 10 cash feed barley bids in Minneapolis were at $2.60 per bushel.
Durum
The Dec. 10 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
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Dec. 10 with 20- cent losses. Canola traded back and forth all week, with market influence coming from the U.S. soybean complex and Canadian dollar. Solid commercial demand added support.
The Dec. 10 cash canola bids in Velva, N.D., were at $14.96 per hundredweight.
Sunflowers
For the week ending Dec. 5, USDA estimated the export sales pace for soybean oil at 13.8 thousand metric tons.
The Dec. 10 cash sunflower bids in Fargo, N.D., were at $17.15 per hundredweight.

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