Wheat
The exceptional pace of spring wheat plantings in the Northern Plains and central Canadian provinces were enough to send the trade lower on the week. Fully 25 percent of the crop went in for the week ending May 7 with good weather ahead.
There have been a few market reports about millers being concerned about sourcing high protein wheat. They should have thought about that before failing to bid up Minneapolis futures prior to spring planting when federal crop insurance rates clearly favored soybeans.
By failing to bid it up on the front end, they may pay for it on the back end particularly if we get unfavorable weather. The shift in acres to Montana does pose logistical issues, but higher Canadian acres and a lower Canadian dollar may bail them out. Look for the Dakotas/Minnesota basis on spring wheat to be much more favorable in the next 12 months if these reports are accurate.
The monthly World Agricultural Supply & Demand Estimates were released May 10. U.S. production and ending stocks numbers were at the low end of expectations while world ending stocks were above the high end of expectations. U.S. winter wheat production is estimated at 1.25 billion bushels, with Kansas production at 289.8 million bushels compared to the Kansas Wheat tour estimate of 281.7 million bushels last week. USDA did have a disclaimer that the numbers likely do not factor in the April winter storm.
ADVERTISEMENT
USDA was 13.8 million metric tons high on 2017-18 world ending stocks versus trade estimates. USDA made an assumption that Chinese stocks of wheat will build as cheaper internal prices will shift usage to corn.
Crop condition ratings released May 8 show 50 percent of the winter wheat crop is headed compared to 46 percent for the five-year average. Winter wheat conditions are 53 percent good to excellent versus 54 percent last week and 62 percent last year. Poor to very poor conditions increased to 15 percent from 13 percent last week and 7 percent last year. Spring wheat plantings are behind pace at 54 percent compared to 60 percent for the five-year average. Spring wheat emerged is at 21 percent compared to 29 percent for the five-year average.
May 11 export sales totaled 9.2 million bushels including a reduction of 0.9 million bushels for the 2016-17 marketing year.
For the week ending May 11, July contracts for Minneapolis wheat were down 5.25 cents at $5.4825, down 9.0 cents at $4.3375 for Chicago wheat and down 9.5 cents at $4.4075 for Kansas City wheat.
Corn
In the first look at 2017-18 new crop ending stocks, USDA pegged U.S. ending stocks at 2.110 billion bushels. Production estimates for 2017 crop are 14.056 billion bushels. If realized this would be 1.08 billion bushels less than the 2016 U.S. crop.
In dissecting the numbers, it appeared that pre-trade estimates for world ending stocks were off 13.5 million metric tons to the high side in corn and 13.8 million metric tons to the low side in wheat. USDA is implying that low internal Chinese corn prices will lower plantings and increase internal demand (remember the U.S. Dry Distillers Grains Import Duty?). USDA is also making the opposite assumption that wheat stockpiles will build in China.
There is speculation that U.S. corn acres will be less than 90 million planted due to the wet spring from Missouri through Indiana. Given reports from a few clients in southern Illinois we would lean that way. They have been pounded by heavy rains and below average yields are likely in that area.
ADVERTISEMENT
The trouble is the funds remain net short 184,630 contracts according to the latest CFTC data. We remain deadlocked in a long term 20 cent range. Any time corn gets to the top end, we have seen producer selling and when we get to the low end, we get end-user buying. For the week ending May 11, July corn was down 1.5 cents at $3.6925 and December corn was down 1.25 cents at $3.8725.
The May 8 planting progress report showed corn plantings are at 47 percent nationally versus the five-year average of 52 percent planted and 61 percent planted last year. Corn was 15 percent emerged versus 19 percent for the five-year average. These numbers show little concern for 2017 crop and its likely we will need a major dry spell to get any excitement.
The demand side has been good. Ethanol production exceeded 1 million barrels per day for the first time since March at 1.006 million. This is 4.57 percent higher than the same week last year. Ethanol stocks as of April 28 are 23.055 million barrels, 8.48 percent higher than last year.
Weekly export sales of corn totaled 8.8 million bushels, with 10.9 million bushels for the 2016-17 marketing year. This was above the 10.2 million bushels needed to be on pace with April's demand projection of 2.225 billion bushels. Shipments of 28.5 million bushels were below the 41.9 million bushels needed in this week's report. Outstanding sales dropped to 557.4 million bushels, 7 percent larger than last year. Mexico may import 3-5 million metric tons of corn from Brazil according to officials.
Soybeans
After an initial reaction to the positive side ahead of, and right after the May 10, 11:00 am USDA report, soybeans gave up their early gains and turned negative the rest of the week. A lower U.S. ending stocks number gave the soybean trade the initial boost, but higher production numbers in South America and larger world ending stocks numbers capped the excitement. Weather will continue to be the main focus as rains fell in the central and eastern Midwest. For the week ending May 11, July soybeans were down 8.5 cents and November 2017 soybeans were down 2.5 cents.
The May 10 USDA report put U.S. ending stocks for 2016-17 at 435 million bushels, in line with the average guess and below the 0.445 million bushels in April. U.S. ending stocks for 2017-18 came in at 480 million bushels, a lot less than the pre-report average estimate of 563 million bushels, with guesses ranging from 420 million bushels to 759 million bushels.
The May 8 planting progress report put soybean plantings slightly behind average, but nothing that will cause any concern this time of year. Soybean plantings were at 14 percent nationally on May 8 versus the five-year average of 17 percent planted and 21 percent planted last year. Farmers in the upper Midwest have had a good week with dry weather to put a lot of seed in the ground, and it is getting planted in mostly good conditions. The eastern corn belt is still wet, and conditions may get producers to think about switching corn acres to soybeans if not already planted or if corn acres have drowned out.
ADVERTISEMENT
Canola
For the week ending May 11, Canola July futures in Winnipeg were down $6.1 Canadian to $519.3 /metric tons Canadian. The Canadian dollar traded down to 0.7302. This brings the U.S. price to $17.20/hundredweight.
• Velva, N.D., $17.20/hundredweight for May through July
• Enderlin, N.D., $17.86 for May through July
• Hallock, Minn., $17.41 for May. $17.64 for June
• Fargo, N.D., $18.20 for May $17.85 for June
• Basis neutral to positive for old crop, consider fixing basis
• Tightening old crop supplies remained supportive
ADVERTISEMENT
• As of March 31, Canadian canola stocks were down 23.3 percent from the same day a year earlier to 6.6 million metric tons.
Barley
Cash feed barley bids in Minneapolis were at $2.05, while malting barley received no quote. Berthold bid is $2.00 and CHS Southwest bid is at $2.40 in New Salem, N.D.
Barley plantings are at 32 percent nationally versus the five-year average of 53 percent planted and 55 percent planted last year.
Durum
Cash bids for milling quality durum are $5.50 in Berthold and at $5.35 in Dickinson.
Sunflower
Cash sunflower bids in Fargo were at $15.00 for May and $15.10 for June.
For the week ending May 11, Soybean oil was 38 cents lower at $32.52 on the July contract.
