Heat finally hits midwest
Wheat Stats Canada released its Principle Field Crop Areas report June 26th. All wheat acres planted are 24.6 million acres, down 0.6% from 2018. Trade was expecting 25.7 million acres. Spring wheat increased 8.4% to 18.8 million acres and durum ...
Stats Canada released its Principle Field Crop Areas report June 26th. All wheat acres planted are 24.6 million acres, down 0.6% from 2018. Trade was expecting 25.7 million acres. Spring wheat increased 8.4% to 18.8 million acres and durum declined 20.9% to 4.9 million acres. Barley acreage increased 14% to 7.4 million acres and oats primarily planted in Saskatchewan increased 18% to 3.6 million acres.
Stats Canada did have a drought map dated June 10th included in this report. Although they have received precipitation since June 10th, the map references most of Saskatchewan, Alberta and western Manitoba as being 60 to 90 mm (2.36 to 3.54 inches) below normal precipitation. Some private estimates are showing Canadian wheat production decreasing 2 to 3 MMT from USDA's current 34.5 MMT estimate.
Spring wheat conditions declined 2% to 75% good to excellent. 22% of the crop is rated fair and 3% poor to very poor. Spring wheat headed is 7% compared to 29% average. Winter wheat conditions declined 3% to 61% good to excellent, 28% fair and 11% poor to very poor. Winter wheat headed is 94% vs. 99% average. Winter wheat harvested is 15% compared to 34% for the 5-year average.
Weather model runs were all over the board this week as is typical of the summertime trading season. Midweek runs showed an increased chance of rain in the western Dakota's in the 6-10 day forecasts. 30% of the spring wheat belt is currently moisture deficient and half of that area could be healed up nicely in the next two weeks before a drier period in late July kicks in. The Pacific Northwest wheat areas showed lesser chances of rain. Longer term 16-30 day forecasts are leaning towards the heat wave in Europe being short lived. Matif wheat futures traded very choppy on the European forecasts.
Later week weather model runs had the 6-10 day forecasts shifting rain from the Dakota's to greater chances in the southern plains with cooler chances in the northern spring wheat belt. 11-15 day runs show wetter chances in the western Midwest and drier chances in the eastern Midwest.
For the week ending June 27th, July contracts for Minneapolis wheat were up 11.75 cents at $5.4775, up 21.5 cents at $5.475 for Chicago wheat, and up 15.5 cents at $4.68 for Kansas City wheat.
Corn contracts sagged this week as July contracts went into delivery. Warmer weather in the two-week forecast sent the corn markets lower as the trade viewed this favorable for crop development. The market failed to even threaten the recent highs on declining crop condition ratings, so it feels now like the market wants to settle into a range until more is known about U.S. summer weather. If this warmer forecast would have occurred for the pollination period, the market would have had an entirely different reaction.
Longer term weather forecasts are calling for a cooler July and August, but a warmer September and October. So there is still some hope that we can avoid +30% moisture this fall. But we definitely need a late fall and we could use some more sunshine in the next 3 months. In 2004 we had a very cool summer and U.S. corn yields posted a record that year, even though we had a lot of immature corn in the northern corn belt. In 1993, corn nationally was 17% below trend line yield. So we still have a long way to go with this growing season and there is going to be no in between. We are either going to have enough yield in 2019 with old crop supplies and a good South American winter crop to pull us through or we're going to have a shortage.
Corn conditions dropped 3% to 56% good to excellent with trade expecting 57-58%. Thirty-two percent of the crop is rated fair and 12% is poor to very poor (+2%). Corn emergence is at 89% compared to 99% for the 5-year average. Progressive Ag's yield model lowered its estimate of US corn yield by 0.85 bu/acre to 163.8 bu/ac.
Weekly exports have slowed down over the past month, totaling only 19.5 million bushels in the last 4 weeks. This is 4.9 million per week average vs. the 23.0 million needed to reach USDA's yearly export estimate. Total commitments of 1.919 billion bushels are now down 15% from last year.
Average estimates are out for the Acreage and Quarterly Stocks Report. Acre estimates are all over the board between 82.0 to 89.8 million acres with 86.66 being the average. This compares to 89.8 ma from the June report. Quarterly stocks average estimate is 5.349 billion bushels compared to 5.305 BB in June of 2018.
Soybean futures were under pressure this past week as July long contracts needed to be liquidated or rolled before July 28th or they risked going into delivery. End of month and end of quarter profit taking also caused weakness in the grain markets after a nice runup this month.
The first soybean crop ratings of the year came out on June 24th, 3 weeks behind average. Soybean crop conditions came in well less than expected at 54% good to excellent compared to 73% G/E last year. This was below analyst estimates of 56-57% G/E. The crop was also rated 36% fair and 10% poor to very poor. This is a poor start to the crop and recently planted acres that are not emerged yet will probably not help these ratings in the near future.
Soybeans planted for the week ending June 23rd was 85% complete vs 100% last year and 97% for the 5-year average. This was on the lower end of estimates that ranged from 85 - 90% complete. This means there were still 12.7 million acres of soybeans left to be planted in the U.S. based off the USDA's 84.6 million acres intended acreage estimate. This is supposed to only include acres still intended to plant and have not decided to protective plant yet. It is hard to understand some eastern corn belt farmers thinking that they will get a decent crop mudding in soybean seed into saturated ground the end of June early July. There are even reports of a few farmers seeding soybeans with helicopters. Why? Rains this past week hit most of the eastern corn belt areas behind on planting progress. There will be a few that plant into July, but these plants will be maturing in the dog days of summer and are getting planted in terrible conditions.
Above normal heat in the 2-week forecast is helping planted acre (how ever many that is?) to start popping out of the ground. Growing degree days are well behind normal but could start to catch up some if the mid-80's and 90 degree days that are forecast for the first half of July transpire. One thing to watch out for is if this heat stays and the rain faucet shuts off, these roots are not very well established after a very wet May and June.
Major support is the bottom end of the gap left in Nov soybean futures at $8.58 - $8.645 on May 25th. The November contract low of $8.155 set on May 13th recovery is major support. Soybeans broke through major resistance at $9.3125 on the weekly chart. On the daily charts, resistance is $9.34 and then the 10-month high of $9.71 for new crop soybeans that was set on December 12th. November soybeans are down 15.25 cents for the week ending June 27th.
For the week ending June 27th, July canola futures were down 3.80 at $452.00/MT CD. The July Canadian dollar was up .0009 at 0.7648. This brings the US price to $15.68 /cwt USD.
• Velva, N.D., $14.64/cwt, September $14.43
• Enderlin, N.D., $14.99/cwt, September $15.13
• Hallock, Minn., $14.57/cwt, September $14.81
• Fargo, N.D., $15.15/cwt, July $15.05
Canadian farmers planted 21.0 million acres of canola in 2019, down 8.2% from their 2018 planted acres. This can be contributed to lower prices compared to the previous year.
Cash feed barley bids in Minneapolis were at $3.25, while malting barley received no quote. Berthold bid is $2.75 and CHS Southwest New Salem bid $3.00.
Canadian farmers planted 7.4 million acres of Barley, up 14% from 2018.
Oats acreage was also up 18.1% on the previous year at 3.6 million acres.
Cash bids for milling quality durum are $5.00 in Berthold and at $5.05 in Dickinson.
Cash sunflower bids in Fargo were at $17.60, July $17.60.
For the week ending June 27th, Soybean Oil was sown 76 cents at $27.81 on the July contract.