Markets turn lower
Wheat Wheat struggled again last week with most of the pressure coming from another week of sluggish wheat exports. Additional selling was tied to a surprisingly bearish U.S. Department of Agriculture December crop production report. For the week...
Wheat struggled again last week with most of the pressure coming from another week of sluggish wheat exports. Additional selling was tied to a surprisingly bearish U.S. Department of Agriculture December crop production report. For the week ending Dec. 12, December Minneapolis dropped 16 cents, December Chicago declined 17.25 cents and December Kansas City was off 17.25 cents.
Wheat started the week slightly mixed with Minneapolis under pressure (mainly from spillover selling from the most recent Statistics Canada production estimate) while Kansas City and Chicago were mostly steady (because of position squaring ahead of USDA's December crop production estimate). Kansas City also saw short covering because of weather concerns.
Dec. 10 was report day. Wheat opened and traded with losses, but extended its losses once USDA released its December crop production estimate. The report was expected to show a slight decrease in wheat ending stocks; early estimates had wheat stocks at 540 million bushels. Instead of stocks decreasing, USDA increased wheat imports by 10 million bushels and that followed through to increase wheat's ending stocks estimate by the same 10 million bushels. This put stocks at 575 million bushels, 35 million more than expected. This pushed wheat to new contract lows in all three exchanges.
Wheat contracts were narrowly mixed for much of Dec. 11 before closing slightly higher. Follow-through pressure from the Dec. 10 bearish report led to some early losses, but support developed tied to solid demand. Egypt announced wheat purchases from Romania and France, and Asian interest remains active. Additional support was tied to weakness in the U.S. dollar.
To close out the week Dec. 12, wheat returned to the path of least resistance, trading lower, with March Chicago setting a new contract low. The Stats Canada report and Dec. 10 USDA report were not friendly to wheat, and the market is approaching oversold as a result. Weakness in corn and soybeans provided additional pressure.
USDA estimated wheat export shipments pace for the week ending Dec. 6 at 19.76 million bushels. This brings the year-to-date export shipments pace for wheat to 678.9 million bushels, compared with 475.7 million for last year. Wheat export sales pace for the week ending Dec. 6 was estimated at 13.7 million bushels for old crop and 400,000 bushels for new crop. This brings wheat's export sales pace for the year to 844.2 million bushels, compared with 625.2 million last year. With 25 weeks left in wheat's export marketing year, shipments need to average 16.8 million bushels and sales need to average 10.2 million to make USDA's projection of 1.1 billion bushels.
Corn continued to trade in a sideways range last week. Traders remain concerned with the unsolved GMO issues with China and now reports have China starting to test imported dried distillers grains. USDA's December report did lower the U.S. stocks for corn. But world stocks are at a 13-year high. For the week ending Dec. 12, March was unchanged.
The corn market was in a choppy two-sided trade on Dec. 9 because of short covering. Traders were positioning ahead of the Dec. 10 USDA December crop production report. Trade estimates see a drop in stocks from an expected revision in exports. Additional support came from good ethanol margins and strong export demand.
The corn market showed little reaction to the Dec. 10 report. USDA estimated the 2013 to '14 ending stocks at 1.792 billion bushels versus November estimate of 1.887 billion, and 79 million bushels below the average trade estimate. Exports were increased by 50 million bushels and ethanol usage was also revised higher by 50 million bushels. USDA estimated world ending stocks for 2013 to '14 at 162.46 million metric tons versus 164.33 million in November and trade expectations of 163.3 million metric tons. USDA showed a 95 million bushel reduction in stocks from last month.
The corn market bounced back Dec. 11 with a fresh export sale and a good ethanol report, which showed the highest weekly use of corn since January 2012. But selling pressure reentered the futures on Dec. 12. Talk of the possibility of more cancellations from China continues to hang over the market. Another pressure point came from news that a group of Senators have introduced a bill to eliminate the ethanol mandate.
Ethanol production for the week ending Dec. 6 averaged 944,000 barrels per day and up 3.4 percent from the previous week. Total ethanol production for the week was 6.608 million barrels. Corn used in production for the week ending Dec. 6 is estimated at 99.12 million bushels and needs to average 94.2 million bushels per week to meet this crop year's USDA estimate. This crop year's cumulative corn used for ethanol production is 1.3 billion bushels. Stocks were 15.448 million barrels and up 2.14 percent from the previous week.
USDA's export inspections report was friendly for corn at 40.2 million bushels versus the 27.7 million USDA has estimated. The corn export sales were estimated at 31.7 million bushels. This brings the year-to-date sales pace for corn to 1.051 billion bushels, compared with 491 million last year. With 38 weeks left in export marketing year, shipments need to average 27.3 million bushels and sales need to average 9.2 million to make USDA's export projection of 1.4 billion.
Soybeans started the week with gains, but struggled through the week. Early support was from strong export demand and from position squaring ahead of what was expected to be a friendly USDA December crop production report. The report was friendly, but the market fell prey to "buy the rumor sell the fact" type trading, as well as from technical selling. For the week ending Dec. 11, January dropped 1.75 cents.
Soybeans closed with strong gains amid expectations that USDA's ending stocks estimate would be reduced in the Dec. 10 World Agricultural Supply and Demand Estimates report. Tight supplies and continued strong Chinese demand provided additional support. The morning of Dec. 9, USDA announced a sale of 290,000 metric tons of soybeans to China, with 60,000 for 2014 and 2015 delivery.
Soybeans traded higher the morning of Dec. 10 ahead of December's WASDE report. Traders expected a friendly report with lower ending stocks estimates. U.S. ending stocks were lowered to 150 million bushels from 170 million last month. This change was in large part because of increased estimated exports. The world ending stocks were increased to 70.6 million metric tons from 70.2 million in November. Estimated Brazilian soybean production was unchanged while estimated Argentine production was raised 1 million metric tons, from 53.5 million in November to 54.5 million this month. Continued favorable growing conditions in South America support the increased production estimate.
On Dec. 11, soybeans recovered from Dec. 10 losses with a higher close amid choppy trade. Tight supplies and continued strong demand, particularly from China, led to a close near the day's high. South American weather will remain a factor in soybean prices with hot weather in the forecast raising concerns that some delayed corn acres could switch to soybeans.
Soybeans closed sharply lower Dec. 12 as fund and speculator selling pressured the market. Traders worry that China could cancel some purchases in the future. While there is no evidence of this yet, it's a valid concern with China accounting for between 70 and 80 percent of U.S. soybean exports.
USDA reported soybean export inspections pace for the week ending Dec. 6 at 60.4 million bushels. This brings the year-to-date export shipments pace for soybeans to 703.4 million bushels, compared with 654.1 million for last year at this time. USDA reported soybean export sales pace for the week ending Dec. 9 at 40.7 million bushels, bringing this year's total to 1.422 billion bushels, compared with 1.092 billion last year at this time. With 38 weeks left in soybean's export marketing year, shipments need to average 19.6 million bushels and sales need to average 789,000 bushels to make USDA's export projection of 1.45 billion.
USDA reported barley export shipments pace for the week ending Dec. 6 at 291,000 bushels, all going to Japan. This brings barley's export shipments pace to 3.58 million bushels, compared with 5.57 million last year. Barley export sales pace for the week ending Dec. 6 was estimated at 300,000 bushels. This brings barley's year-to-date export sales pace to 5.7 million bushels, compared with 5.6 million last year.
USDA made no adjustments to barley's supply and demand estimate.
Dec. 12 cash feed barley bids in Minneapolis were at $3.50 per bushel, while malting barley bids were at $5.75.
USDA reported durum export shipments pace for the week ending Dec. 6 at 729,000 bushels, the majority going to Italy. Durum export sales pace was estimated at 700,000 bushels. This brings durum's year-to-date export sales pace to 11.5 million bushels, compared with 13.2 million last year.
USDA left durum's supply and demand estimate unchanged.
Dec. 12 cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $6.95.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Dec. 12 with $23.80 (Canadian) losses. Canola started the week under pressure losing ground both Dec. 9 and 10. Pressure continued to come from the bearish Stats Canada report, which put Canada's canola production at a record level. Short covering limited the week's losses on Dec. 11, as did a neutral USDA crop production report. But selling returned Dec. 12, pushing canola down to another new low.
Dec. 12 cash canola bids in Velva, N.D., were at $18.41 per hundredweight.
Last week's soybean oil export sales pace was estimated at 2.3 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 270.7 thousand metric tons, compared with 620.3 thousand metric tons for last year.
Dec. 12 cash sunflower bids in Fargo, N.D., were at $19.85 per hundredweight.