Wheat: When will it bottom?
Wheat struggled again last week, trading to another round of lows. For the week ending Dec. 19, wheat had traded with losses in every session and has traded lower 11 of the past 12 sessions. The lack of direction and weak fundamental picture continues to added pressure. For the week ending Dec. 19, March Minneapolis dropped 14.5 cents, March Chicago slipped 18 cents and March Kansas City dropped 19.75 cents.
The Dec. 16 session started wheat off on the wrong foot as the market traded lower because of higher production estimates for Russia. Additional selling spilled over from a softer corn exchange. The Dec. 17 session marked the ninth session out of 10 that wheat has lost ground. This has put wheat in an extremely oversold market condition. Chicago did try to trade with gains, but slipped to post losses going into the close. Early support came from technical buying, as well as from spillover support from a stronger corn market. But news that the recent Egypt wheat tender went to Russia and Romania put pressure on wheat late in the session. Late session pressure was also from improving weather conditions, as temps start to rise and moisture moves into the majority of the hard red winter wheat regions of the U.S.
To finish out the week, wheat opened and traded with gains Dec. 18 and 19, with support spilling over from a stronger corn market, as well as from the Dec. 19 friendly export sales estimate. Even though most have been downgrading wheat's export pace, sales have been more adequate to reach the U.S. Department of Agriculture projections for the year. But it seems the negative grip that has set in on wheat remains well in tack as selling reemerged as the market neared its close. All three of the wheat exchanges are very much entrenched in a negative rut and have been since Dec. 5.
USDA estimated wheat export shipments pace for the week ending Dec. 13 at 17.6 million bushels. This brings the year-to-date export shipments pace for wheat to 696.5 million bushels, compared with 492.4 million for last year. Wheat export sales pace was estimated at 24.1 million bushels for old crop wheat and 100,000 bushels for new crop. This brings wheat's export sales pace for the year to 868.3 million bushels, compared with 649.1 million last year. With 24 weeks left in wheat's export marketing year, shipments need to average 16.8 million bushels and sales need to average 9.65 million to make USDA's 1.1 billion bushel projection.
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Corn: Chinese cancellations
The corn market continued to trade in a sideways range again last week as bearish factors continue to limit any buying interest. Political concerns with the ethanol mandate and Chinese cancellations continue to hang over the market. For the week ending Dec. 19, March was up 5 cents.
The corn market started the week lower with follow-through weakness from Dec. 13 trade. The export market has concerns, as well, following Chinese rejections of 600,000 metric tons so far this winter because of unapproved genetic strains. There is also another 600,000 metric tons on the water that trade is concerned about, along with 2.7 million metric tons of corn that has been bought but not yet shipped. The U.S. Secretary of Agriculture was in China last week to see if they can come to some agreement on the nonapproved GMO variety. Dec. 16 export inspections were bearish, coming in below the amount needed to keep pace with USDA's projection.
The futures came back and traded slightly higher to end the week with short covering and a fresh export sale announced to Japan. South Korea also purchased 195,000 metric tons of corn last week, but rumors were that the corn was on the water and diverted because of a chance of being rejected by China. The South American weather forecast is calling for more heat this week and drier weather in Argentina. Last week's ethanol report showed that demand remains strong for corn and offers support.
Ethanol production for the week ending Dec. 13 averaged 928,000 barrels per day and down 1.69 percent from the previous week. Total ethanol production for the week was 6.496 million barrels. Corn used in production for the week ending Dec. 13 is estimated at 97.44 million bushels and needs to average 95.41 million bushels per week to meet this crop year's USDA estimate. This crop year's cumulative corn used for ethanol production is 1.39 billion bushels. Stocks were 15.62 million barrels and up 1.15 percent from the previous week.
USDA's export inspections report was friendly for corn at 25.1 million bushels. The corn export sales were estimated at 34.3 million bushels. This brings the year-to-date sales pace for corn to 1.083 billion bushels, compared with 496 million bushels for last year. With 37 weeks left in the export marketing year, shipments need to average 28.7 million bushsels and sales need to average 9.9 million to make USDA's export projection of 1.45 billion.
Soybeans: Sideways trade continues
Soybeans continue to be the leader of the grain complex, but the leader is starting to get tired. Demand remains strong and weather concerns are surfacing in South America, but technically the market is in need of a correction. For the week ending Dec. 19, January soybeans dropped 0.5 cents.
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Soybeans closed higher on Dec. 16 and 17 with support tied to tight supplies. Demand remains strong with China accounting for a large percentage of exports. National Oilseed Processors Association crush numbers released on Dec. 16 were bullish with crush pegged at 160.15 million bushels, the most since January 2010. Dec. 16 export inspections were bullish, coming in above the amount needed to keep pace with USDA's projection.
Soybeans traded sharply lower Dec. 18, as Informa released its 2014 acreage estimate. December's estimate was 81.9 million acres, down from its 83.8 million acre estimate in November, but still well above 76.5 million acres in 2013. South American weather remains a factor with some concerns arising tied to hot, dry conditions expected this week. South America's crop remains on track for record production.
Dec. 19 saw nearby soybean contracts trade lower early in the session, but close higher with support from noncommercial buying. Pressure was tied to an announced cancellation of 576,300 metric tons of export sales to unknown destinations, with traders suspecting China. This cancellation caused export sales to come in below expectations. Additional pressure was tied to early soybean harvest in Brazil getting ready to kick off in a few weeks. Dec. 19 export sales were bullish, coming in above the amount needed to keep pace with USDA's projection, despite the cancellation.
USDA reported soybean export inspections pace for the week ending Dec. 13 at 62.5 million bushels. This brings the year-to-date export shipments pace for soybeans to 765.9 million bushels, compared with 698.6 million for last year at this time. USDA reported soybean export sales pace for the week ending Dec. 13 at 15.3 million bushels, bringing this year's total to 1.435 billion, compared with 1.115 billion last year at this time. With 37 weeks left in soybean's export marketing year, shipments need to average 19.2 million bushels and sales need to average 108,000 bushels to make USDA's export projection of 1.475 billion.
Barley
USDA reported no barley export shipments or sales for the week ending Dec. 13. This brings barley's export shipments pace to 3.58 million bushels, compared with 5.57 million last year. Barley's year-to-date export sales pace is at 5.7 million bushels, compared with 5.6 million last year. Cash feed barley bids in Minneapolis were at $3.50 per bushel, while malting barley bids were $5.75.
Durum
USDA reported durum export shipments pace for the week ending Dec. 13 at 1.25 million bushels, with a majority of the bushels going to Italy (1.189 million bushels). Durum export sales pace was estimated at 800,000 bushels. This brings durum's year-to-date export sales pace to 12.2 million bushels, compared with 14 million last year. Cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while Dickinson, N.D., bids were $6.85.
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Canola
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Dec. 19 with small gains as the front month January gained ($1.10). Canola started the week off with gains, but ended the week on the defense. Early support was from technical buying. The canola market is extremely oversold and in need of a correction and that was the main feature of the market to start the week. Canola lost ground toward the end of the week because of spillover selling from a weaker U.S. soybean complex. Dec. 19 cash canola bids in Velva, N.D., were at $18.21 per hundredweight.
Sunflowers
Soybean oil export sales pace was estimated at 27 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 297.7 thousand metric tons, compared with 614.5 thousand metric tons for last year. Dec. 19 cash sunflower bids in Fargo, N.D., were at $19.70 per bushel.
