Planting progress limits market

Wheat

The wheat market was softer early week on improved crop condition ratings for winter wheat. Crop condition ratings released May 22 show 72 percent of the winter wheat crop is headed compared to 67 percent for the five-year average. Winter wheat conditions are 52 percent good to excellent versus 51 percent last week and 62 percent last year. Poor to very poor conditions decreased to 15 percent from 17 percent last week and 8 percent last year.

Spring wheat plantings are at 90 percent compared to 84 percent for the five-year average. Spring wheat emerged is at 62 percent compared to 59 percent for the five-year average. Progressive Ag's yield model increased .41 bushels per acre to 49.88 compared to the 48.8 bushel trend. This certainly points to an average yielding crop despite the problems encountered in late April.

The only two big questions that remain on the fate of the 2017 winter wheat crop are how many acres will be abandoned/grazed, and of the acres remaining, how will quality turn out? Reports of early Texas harvest yields point to average yields with low protein. With rains in the 6 to 10 day forecasts over a good portion of Kansas and Nebraska, we could see further quality erosion in winter wheat.

The Minneapolis premium to Chicago and Kansas City has widened from $1.10 to over $1.30 pointing to a continued need for higher protein wheat in 2017-18.

Agriculture and Agri-Food Canada stated that the 8 percent increase in Canadian wheat plantings were all in reaction to the perceived shortage of low protein wheat. 80 percent of Canadian sowings will be to Canada western hard red spring wheat, up from 76 percent in 2016. AAFC estimates 2017-18 wheat production at 29.5 million metric tons, down 7 percent from this season with ending stocks at 6.6 million metric tons, down 4.3 percent.

The recent decline in the U.S. dollar has helped make U.S. exports more competitive. The latest CFTC data showed funds increasing their net short Chicago at -146,000 contracts.

May 25 export sales totaled 20 million bushels including 7.4 million bushels for the 2016-17 marketing year. Weekly shipments of 27.0 million bushels were below the 30.8 million bushels needed in this week's report to stay on pace with USDA's revised May projection of 1.035 billion bushels. Outstanding sales totaled 108.0 million bushels, 55 percent larger than last year.

For the week ending May 25, July contracts for Minneapolis wheat were up 7.25 cents at $5.6225, down 4.5 cents at $4.3075 for Chicago wheat, and down 6.75 cents at $4.3125 for Kansas City wheat.

Corn

Corn prices were sideways again this week as they continue to trade in the middle of its trading range. The planting progress report that came out on May 22 showed that farmers caught up to the five-year average of planted acres. Farmers have been able to plant substantial acres in the small windows they have seen this wet spring. As of May 22, corn plantings are at 84 percent nationally versus the five-year average of 85 percent planted and 84 percent planted last year. Corn emergence is at 54 percent nationally versus the five-year average of 55 percent planted and 58 percent emerged last year.

Corn has been stuck in a 20-cent trading range since the middle of March, with the high of the range for July at $3.795 and the low of $3.61. Besides a small breakout for around a month that peaked at $3.94 in the middle of February, corn has been trading in this same 20-cent since October. For the week ending May 25, July corn was down 3.25 cents and December corn was down 2.75 cents.

This market is in need of sustainable bullish news that has been nonexistent since last summer. Funds are in contrail with heavy net short positions. May 19 CFTC data showed non commercials are net short a staggering 204,000 contracts. Good demand and a cool wet spring have not swayed the funds bearish outlook. It will take some adverse summer forecasts to get this market moving in the right direction, as large U.S. and Brazilian stocks are still the leading factor for range bound trading.

Even adverse forecasts might not be enough to get this market moving in the right direction until unfavorable weather actually shows that it will affect yields. Traders have not been concerned this spring with the wet weather that farmers have experienced in the eastern Midwest and Central Plains states. In the past month, around 40 percent of the Midwest has gotten twice the amount of their normal rainfall. Heavy rains have fallen from Arkansas to Ohio.

Speculators are more hesitant to trade weather this year, as early threats the last couple of years did not turn into below trend yields, but instead we saw record production numbers. Even with talk of above average replant acres, the trade does not seem anxious, as abundant stocks in the U.S. and Brazil are there.

The crop condition this spring is not as cut and dry as last year, so the year's first crop rating report is at a premium this year. One would think that with the cooler wet temps much of the U.S. has experienced this spring, we should have already given up the top end yield projections. This should especially be true in the eastern corn growing regions.

In the past, above average yields were not seen the majority of the time at harvest if the first crop condition report comes in under 70 percent good to excellent. Last year's corn crop started at 74 percent good to excellent.

Soybeans

Soybeans sold off this week and were not able to hold last August's low of $9.40. Old crop contracts are at lows not seen since the beginning of April 2016. November new crop soybeans are now at lows last seen in September. May 19 CFTC data showed non commercials are still net short 37,000 contracts, up 3,000 contracts from the week prior.

There is not much pressure for the funds to switch directions, as record South American production and an increase in soybean acres are keeping the bears satisfied for now. For the week ending May 25, July soybeans were down 12 cents and November soybeans were 12.5 cents lower.

Soybean meal futures are back to eight month lows and soybean oil is back at the bottom end of its 12-month trading range. The soy complex has been pressured on lower palm oil futures and PRC crush margins that are reportedly at 9 month lows, as it is projected large stocks are already in storage.

Soybean plantings are at 53 percent nationally versus the five-year average of 52 percent planted and 53 percent planted last year. Soybean emergence is at 19 percent nationally versus the five-year average of 21 percent planted and 20 percent emerged last year. We will not know for a few more weeks what NASS data will show for the soybean's crop condition ratings. Soybeans are not off to a fast start to the year with the cool wet weather we have seen and is forecast for the next few weeks.

Canola

For the week ending May 25, canola July futures in Winnipeg were down $2.80 Canadian to $520.40/metric tons Canadian. The Canadian dollar traded up .0015 at 0.7416. This brings the U.S. price to $17.51/hundredweight U.S.

Hedgers: Target $532.25 July futures for old crop sale

• Velva, N.D., $17.66/hundredweight for May through July

• Enderlin, N.D., $18.50 for May through July

• Hallock, Minn., $17.70 for May and $17.94 for June

• Fargo, N.D., $18.50 for May/June and $18.35 for July

• Old Crop Basis strengthening

• Canadian dollar recovering from low end of range

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.

As of May 21, 88 percent of the U.S. barley crop is planted compared to 87 percent for the five-year average. Emergence is 59 percent compared to 64 percent for the five-year average.

Durum

Cash bids for milling quality durum are $5.50 in Berthold, N.D., and at $5.75 in Dickinson, N.D.

Despite Canadian durum acreage down 17 percent at 5.14 million and U.S. durum acreage down 17 percent at 2.0 million, the U.S. stocks to use ratio is 47.2 percent.

Sunflower

Cash sunflower bids in Fargo were at $15.00 for May and $15.10 for June/July.

For the week ending May 25, soybean oil was $1.00 lower at $32.04 on the July contract.