Wheat: another week of new lows
Wheat traded to another round of new lows last week. For the short week ending Dec. 26, March Minneapolis dropped 12.25 cents, March wheat dropped 7.5 cents and March Kansas City gave back 13 cents. Most of the selling was tied to good crop ratings for U.S. winter wheat, as well as from larger-than-expected supplies of wheat in the world.
Wheat started the week on the defense as improving weather conditions prevail for much of the major winter wheat growing regions of the U.S. Wheat futures have had a tough go of it since early December because of larger-than-expected production estimates from some major exporting countries (Canada, Australia and Russia). U.S. wheat export has been strong and it appears U.S. wheat exports will make the U.S. Department of Agriculture's projections, but that does not seem to be enough to help wheat find a bottom. Trading is thin and it will likely stay that way through the end of the year.
The Dec. 24 abbreviated session had wheat trading lower again, as wheat continues to take the path of least resistance. Technically, wheat is oversold and in need of a correction bounce, but it seems that no one wants to get in front of the train at this point. Light pressure came from a stronger U.S. dollar. Traders seem to be comfortable staying on the sidelines.
Thin, light trading dominated the wheat exchanges Dec. 26. Fundamentally, wheat has little friendly news to rally on, other than decent demand. The winter wheat crop ratings are at one of the highest levels in years and have gone into dormancy in great shape. Export demand remains lackluster at best, as it seems wheat sales will only make USDA projections. Wheat also has been following corn, and with corn trading on the defense, it was easier for wheat to do the same. Technically, wheat is in need of a bounce, but that seems to be unlikely until the New Year.
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USDA estimated wheat export shipments pace for the week ending Dec. 20 at 19.5 million bushels. This brings the year-to-date export shipments pace for wheat to 716 million bushels, compared with 507.6 million for last year. Wheat export sales pace for the week ending Dec. 20 was estimated at 21.9 million bushels for old crop and 2.2 million for new crop. This brings wheat's export sales pace for the year to 890.3 million bushels, compared with 686.2 million last year. With 23 weeks left in wheat's export marketing year, shipments need to average 16.7 million bushels and sales need to average 9.1 million to make USDA's 1.1-billion-bushel projection.
Corn: China rejects DDGs
The corn market had increased selling interest enter the trade late last week. Traders remain nervous about the possibility of future rejections of corn from China, especially now that China rejected its first shipment of dried distillers grains (DDGs) on Dec. 26. Trade estimates were that about 450,000 metric tons of DDGs were expected to be shipped per month in January and February, which will now be delayed. For the week ending Dec. 26, March corn was down 7 cents.
Corn closed with small gains to start the week ahead of the Christmas holiday. The export inspections report was decent and larger than the previous week. South Korea also moved up a cargo of U.S. corn from April to January, which is linked to China's refusal to accept genetically modified (GMO) corn. The forecast in Argentina to start the week was for dry and hot weather, which offered additional support. There was also unwinding of corn versus soybean spreads. The Dec. 24 session was a nonevent, ending virtually unchanged. Position squaring ahead of the Christmas holiday was the main feature in this short trading session.
The corn market traded under pressure Dec. 26, with the Chinese rejecting its first shipment of DDGs of the nonapproved GMO variety of corn. Traders are starting to look ahead to the Jan. 10 USDA report and expect to see larger numbers.
Ethanol production for the week ending Dec. 20 averaged 926,000 barrels per day and down 0.22 percent from the previous week. Total ethanol production for the week was 6.482 million barrels. Corn used in production the week ending Dec. 20 is estimated at 97.23 million bushels and needs to average 95.36 million bushels per week to meet this crop year's USDA estimate. This crop year's cumulative corn used for ethanol production for this crop year is 1.49 billion bushels. Stocks were 15.66 million barrels and up 0.22 percent from the previous week.
USDA's export inspection report was friendly for corn at 35.9 million bushels. Trader estimates ranged from 33 million to 38 million bushels. The corn export sales were estimated at 58.2 million bushels. This brings the year-to-date sales pace for corn to 1.125 billion bushels, compared with 500 million for last year. With 36 weeks left in corn's export marketing year, shipments need to average 28.5 million bushels and sales need to average 9 million bushels to make USDA's export projection of 1.45 billion bushels.
Soybeans: lower in short week
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Soybeans struggled again last week as the market fell prey to position squaring ahead of the holiday. Most traders were absent because of the Christmas holiday. Improving weather conditions in South America added pressure. For the week ending Dec. 26, January dropped 20 cents.
On Dec. 23, soybeans closed lower in soft trade to open the holiday-shortened week. Commercial selling pushed the market lower as traders continued to monitor South American growing conditions. The forecast in South America calls for hot, dry weather before giving way to beneficial rain this week. Support was tied to a sale of 120,000 metric tons of old crop soybeans to unknown destinations, announced Dec. 23 by USDA. Dec. 23 export inspections were bullish, coming in well above the amount needed to keep pace with USDA's projection.
Soybean trade was quietly mixed on Dec. 24, as January closed with gains and new-crop November slipped lower ahead of the Christmas holiday. Solid old crop demand provided support, with USDA announcing a sale of 114,000 metric tons of soybeans to Egypt. An additional sale of 185,000 metric tons of soybeans to an unknown buyer was also announced, with 120,000 metric tons for 2014 to '15 delivery. The potential for record production in South America pressured deferred contracts. The focus was on weather, with hot and dry conditions last week giving way to beneficial rain in this week's forecast.
The markets were closed on Dec. 25 for Christmas, and re-opened at 8:30 a.m. Dec. 26.
On Dec. 26, soybeans traded lower with spillover pressure from corn combined with commercial selling. The market remains wary of potential Chinese cancellations while monitoring the weather out of South America. South America's forecast remains hot and dry, followed by milder temperatures and beneficial rain. Solid old-crop demand continues to provide underlying support to nearby contracts.
USDA reported soybean export inspections pace for the week ending Dec. 20 at 55.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 821.2 million bushels, compared with 744 million for last year at this time. USDA reported soybean export sales pace for the week ending Dec. 20 at 26.5 million bushels, bringing this year's total to 1.461 billion bushels, compared with 1.115 billion last year at this time. With 36 weeks left in soybean's export marketing year, shipments need to average 18.2 million bushels and sales within 1.4 million bushels to make USDA's projection of 1.475 billion.
Barley
USDA reported no barley export shipments or sales for the week ending Dec. 20. This brings barley's export shipments pace to 3.58 million bushels, compared with 5.58 million last year. Barley's year-to-date export sales pace is at 5.8 million bushels, compared with 5.6 million last year. Dec. 26 cash feed barley bids in Minneapolis were at $3.65 per bushel, while malting barley bids were $6.
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Durum
USDA reported durum export shipments pace for the week ending Dec. 20 at 767,000 bushels, all going to Italy. Durum export sales pace for the week ending Dec. 20 was estimated at 1.7 million bushels. This brings durum's year-to-date export sales pace to 13.9 million bushels, compared with 15.6 million last year. Dec. 26 cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $6.80.
Canola
Canola futures on the Winnipeg, Manitoba, exchange traded the first half of the week but were closed Dec. 25 and 26 in observance of the Christmas holiday and Boxing Day. Selling dominated the canola market to start the week, as the front month January dropped $11.20 (Canadian), forcing the market to new lows. Technical selling pressure combined with spillover selling from a softer U.S. soybean complex. Position squaring ahead of the holiday was also evident. Dec. 26 cash canola bids in Velva, N.D., were at $17.86 per hundredweight.
Sunflowers
Soybean oil export sales pace for the week ending Dec. 20 was estimated at 83.9 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 381.6 thousand metric tons, compared with 631.8 thousand for last year. Dec. 26 cash sunflower bids in Fargo, N.D., were at $19.65 per hundredweight.
