New-threatening weather

Wheat The spring wheat market received more bullish news when the June 19 conditions ratings for the six major producing states dropped 4 percent to 41 percent good to excellent compared to 45 percent last week. The trade had expected a 5 percent...



The spring wheat market received more bullish news when the June 19 conditions ratings for the six major producing states dropped 4 percent to 41 percent good to excellent compared to 45 percent last week. The trade had expected a 5 percent increase. Poor to very poor conditions increased to 27 percent, up from 20 percent last week. These ratings are now the poorest since the drought year of 1988, with North Dakota showing 63 percent of topsoil moisture short or very short, giving buyers plenty of ammunition.

This was the second time in a week that it appeared to be a reversal to the downside from the prior day only to see buying interest enter in. Chicago and Kansas City contracts backed off midweek as the Russian ruble has declined in value leading to realities of large buyers like Egypt sourcing less from the U.S.

The spring wheat rationing price has now become the talk of the trade. In 2016 the U.S. produced 493 million bushels of spring wheat. Current estimates given dry conditions in the Dakotas and Montana are around 370 to 390 million bushels. Conditions in Minnesota are very good with a full 89 percent of the crop rated good to excellent. But as a sum of the whole - Minnesota has 11 percent of the total spring wheat acreage - we think this estimate is optimistic.

The latest Commodity Futures Trading Commission data show that funds decreased their net short in all wheat by 15,000 contracts to -80,000. For the week ending June 22, July contracts for Minneapolis wheat were up 13.5 cents at $6.5625, down 4.0 cents at $4.6125 for Chicago wheat, and down 5.75 cents at $4.6775 for Kansas City wheat.



Corn prices were in a free fall this week and are now back to lows last seen in the end of April. It is hard to find any news at the moment to get this market moving north. Cooler, wetter conditions in the extended forecast are giving bears another reason to drag this market back towards the lower end of the range.

It was concerning that corn could not find momentum as the funds dumped over 10,000 net short contracts as drier, hotter weather was covering much of the Midwest the past few weeks. In the week that ended June 13, funds dumped a large number of net short corn contracts to around 18,000 contracts, down from 139,000 the week prior. Farmers selling on minor rallies limited any momentum as there is still a lot of old crop corn sitting in bins.

The market is focused on the lack of weather concerns after early drought fears gave this market a mini rally. There is still time to build in a weather premium, but the funds are in no hurry to do it with current weather forecasts. The Pro Ag yield model after the June 19 crop ratings was fractionally lower from the week prior and still below the U.S. Department of Agriculture's trend yield. For the week ending June 22, July and December corn were both down 21.25 cents

Last week's crop conditions were expected to improve, but stayed close to the same. There was a 2 percent switch from good to excellent ratings, but not a drastic change in conditions. The trade was expecting a couple percentage points increase in corn condition ratings. A lower than expected acreage number on June 30 is the next chance to find supportive news.

Options expired on June 23 and there were over 70,000 call options around the $3.70 and $3.80 area that expired worthless. $3.60 calls were even taken out as the market took maximum premium. Funds have a keen sense of finding these areas as they would like as many options as possible to expire worthless, especially if there is no other news to move the markets.

Crude oil is not helping row crops out as it fell below $43 and to lows last seen in August. Increased oil output from the U.S. and other non-OPEC countries continue to frustrate Saudi Arabia and other OPEC producers after OPEC extended their production cuts.

Ethanol production was at 990,000 barrels per day. Weekly ethanol production decreased 1.2 percent from last week but is up 2.91 percent from last year. Corn use for ethanol was 103.95 million bushels, ahead of the 95.836 million bushels pace needed for USDA's estimates.



Soybeans broke through their recent lows and are now at prices last seen in April 2016. August soybeans broke through support which was the early June lows of $9.10 and new crop soybeans broke through support which was $9.15. For the week ending June 22, July soybeans were down 32.5 cents and November 2017 soybeans were down 33.25 cents at $9.3875.

Poor export sales numbers weighed on prices this week as South America is trumping the export markets like they normally do this time of year. The non-threatening extended forecast is continuing and is not concerning the short funds or getting end users excited to buy yet. For the week that ended June 13, funds reduced their short net positions of soybeans to around 80,000 contracts, down from 95,000 the week prior. Concerns about expanded soybean acres in the June 30 planted acreage report are also keeping this market under pressure.

The second crop ratings of the season on June 19 showed a 1 percent increase in good to excellent ratings, and showed us that even though rains fell, they were spotty. Some areas that received rains didn't need them either. Even though soybeans are behind schedule and very short for this time of year in many areas, the trade had drought on its mind, so this cooler pattern is bringing the bears back into play. The cool wet spring has this soybean crop looking for some heat units. Soybeans are rated at 67 percent good to excellent versus 66 percent good to excellent last week and 73 percent last year. Soybeans were rated 7 percent poor to very poor versus 6 percent last week and 5 percent last year.

Soybean plantings are at 96 percent nationally versus the five-year average of 93 percent planted and 95 percent planted last year. Soybean emergence is at 89 percent nationally versus the five-year average of 84 percent planted and 88 percent emerged last year.

There will be pressure on this market until we find out if or how much the USDA will increase its planted acres number on the June 30 acreage report. It isn't helping that the EPA has pushed back the release of its proposed biofuel quotas until at least next week as officials consider last-minute changes.


For the week ending June 22, canola July futures in Winnipeg were down $9.10 Canadian to $505.00 Canadian per metric ton. The Canadian dollar traded down .0009 at 0.7558. This brings the U.S. price to $17.31 per hundredweight.


• Velva, N.D., $17.64 per hundredweight for June through July

• Enderlin, N.D., $18.14 for June through July

• Hallock, Minn., $17.74 for June and $17.81 for July

• Fargo, N.D., $18.50 for June, $18.30 for July


Cash feed barley bids in Minneapolis were at $2.05, while malting barley received no quote. Berthold bid is $2 and CHS Southwest bid is at $2.40 in New Salem, N.D.

For the five major producing states, barley conditions are rated 59 percent good to excellent compared to 72 percent last week and 77 percent last year.


Cash bids for milling quality durum are $6.40 in Berthold, N.D., and at $6.75 in Dickinson, N.D. These bids are 50-55 cents higher over the past week. Twenty percent of Montana durum has yet to emerge due to dry topsoil conditions. North Dakota's durum crop is rated only 18 percent good to excellent with 21 percent poor to very poor.


Cash sunflower bids in Fargo were at $15.60 for June and $15.50 for July. Soybean oil was $1.59 lower for the week at $31.55 on the July contract.

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Mikkel Pates set the standard for agricultural journalism during his 44-year career in the region, working for Agweek, The Forum and the Worthington Globe.
Mikkel Pates reflects on his time as an ag journalist in a three-part series.