Uneventful USDA report
Wheat Wheat started last week with gains, but slipped into negative territory the second half of the week. Early support came from another week of decreasing crop condition ratings, while late session pressure came from a negative U.S. Department...
Wheat started last week with gains, but slipped into negative territory the second half of the week. Early support came from another week of decreasing crop condition ratings, while late session pressure came from a negative U.S. Department of Agriculture crop production report. For the week ending April 10, May Minneapolis lost 20.25 cents, September Minneapolis dropped 11.5 cents, July Chicago lost 6.5 cents and July Kansas City lost 9.5 cents.
Wheat traded with gains April 7 and 8. Early support came from reports of disappointing rainfall amounts over the weekend for the Southern Plains. Additional support came from thoughts that USDA's crop condition ratings report will show declines. A weaker U.S. dollar added to the gains.
April 9 and 10 had wheat trading on the defense. A negative USDA crop production report was the main reason for the welling. USDA increased wheat's ending stocks 25 million bushels to 583 million. This was somewhat expected by the trade (average trade estimates were at 581 million bushels). The increase in stocks was a result of USDA reducing wheat imports by 5 million bushels, while decreasing wheat feed demand by 30 million. World wheat estimates were also bearish, as world stocks increased 2.87 million metric tons to 186.68 million metric tons, compared with the average trade estimate of 183.7 million metric tons and March's estimate of 183.81 million metric tons. April 10 pressure was tied to a slightly bearish USDA export sales estimate, which showed a dramatic slowdown in wheat sales the week ending April 4. Forecasts were calling for another chance of rain in the Southern Plains for the weekend and that added selling pressure. Just as in 2013, the U.S. will have another production issue in 2014, while the world will not.
USDA estimated wheat export shipments pace for the week ending April 4 at 22.3 million bushels. This brings the year-to-date export shipments pace for wheat to 974.9 million bushels, compared with 821.4 million for last year. Wheat export sales pace for the week ending April 4 was estimated at 14.3 million bushels, with 1.5 million being old crop and 12.8 million being new crop. This brings wheat export sales pace to 1.11 billion bushels, compared with 943.8 million last year. With eight weeks left in wheat's export marketing year, shipments need to average 25 million bushels and sales need to average 8.1 million to reach USDA's expectations of 1.175 billion.
The USDA weekly crop condition rating report showed a dramatic decline in the U.S. winter wheat crop rating. When wheat went into dormancy, the crop was rated 62 percent good to excellent, 30 percent fair and 8 percent poor or very poor. The April 8 rating put the crop at 35 percent good to excellent, 36 percent fair and 29 percent poor or very poor, a decline of 27 percent. Every state had significant drops in ratings except for one, Montana, which showed wheat conditions increasing 8 percent. Other states' ratings were: Colorado: -20 percent, Illinois: -25 percent, Indiana: -15 percent, Kansas: -34 percent, Nebraska: -15 percent, Ohio: -40 percent, Oklahoma: -62 percent, South Dakota: -14 percent, and Texas: -19 percent.
Corn ended close to unchanged for the week, although there was movement. Support came from traders expecting to see a cut in stocks from USDA and the report did confirm that, but the reaction ended up being buy the rumor and sell the fact. The upside was limited with economic trouble in China, as it continues to cancel U.S. purchases. The weather is also improving and field work has started. As of the April 10 close, the May contract was down .5 cent for the week, while the December contract lost 1.75 cents.
Corn was choppy to start the week, as traders looked ahead to the monthly USDA report. The futures did find support from traders expecting another drop in old-crop ending stocks and the export inspections were good. The upside was limited with long liquidation by the funds and a dry, warmer forecast for much of the country in the next week. China also gave clearance for Brazil corn imports early in the week.
The report was supportive for corn, but the market had also built that in and ended lower for the day. USDA's 1.331-billion-bushel ending stocks came in at the low end of trade expectations. USDA trimmed corn ending stocks by 125 million bushels from last month by raising exports. The stocks-to-use ratio was lowered by 1 percent to 9.9 percent, but it's still larger than last year's 7.4 percent. USDA increased its Brazilian corn forecast by 2 million metric tons, above the range of trade expectations, while it left Argentina's production unchanged at 24 million metric tons. USDA also lowered global ending stocks to 158 million metric tons versus 158.47 million metric tons. April 10 had additional follow-thorough selling from April 9. CONAB also released estimates for Brazil's corn crop at 75.5 million metric tons and 3.5 million metric tons larger than USDA.
Ethanol production for the week ending April 4 averaged 896,000 barrels per day, down 2.82 percent from the previous week. Total ethanol production for the week was 6.272 million barrels. Corn used in production for the week ending April 4 is estimated at 94.08 million bushels and needs to average 98.48 million bushels per week to meet this crop year's USDA estimate of 5 billion bushels. Stocks were 16.407 million barrels, up 3.35 percent from the previous week.
USDA's export inspections report was bullish for corn at 51.6 million bushels versus the 33.8 million needed to keep pace with USDA projections of 1.625 billion. Corn export sales were estimated at 28.2 million bushels, above the amount needed to stay on pace with USDA's estimate of 1.75 billion bushels. The shipments came in at 47.9 million bushels, above the 39 million needed to keep pace with USDA projections.
As of the April 10 close, May soybeans were 8.5 cents higher for the week, while the November contract gained 17 cents. Soybeans were down 8 to 18 cents early in April 11 trade.
Soybeans closed with losses April 7, as the inverse on the May to July spread continued to weaken. The weakening spread is indicative of increasing commercial pressure. The market remains fundamentally bullish with tight old-crop stocks and another round of strong export inspections. Some South American soybeans are expected to land in the U.S. soon to help meet crush needs.
Soybean trade was higher April 8 and early April 9, ahead of USDA's World Agricultural Supply and Demand report. The report came in on the low end of expectations. U.S. ending stocks were pegged at 135 million bushels, compared with 138 million expected and 145 million in March. World ending stocks of 69.42 million metric tons were below the 70 million metric tons expected and 70.64 million last month. South American production estimates came in as expected, with Brazil falling to 87.5 million metric tons from 88.5 million in March, while Argentina was unchanged at 54 million metric tons. The May contract closed at a new high on April 9, following another confirmation of extremely tight soybean stocks.
Soybeans traded lower April 10, as bull spreads softened. Soybean supplies remain extremely tight and the April 10 export sales report was solid, but demand appears to be slowing and China has defaulted on some soy cargoes. The harvest continues to move forward in South America, with Brazil expected to be 85 percent complete by the end of last week. Export sales are 3.7 percent ahead of USDA's estimate, despite the recent increase.
USDA reported soybean export inspections pace for the week ending April 4 at 18.7 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.495 billion bushels, compared with 1.226 billion for last year at this time. Soybean export sales pace for the week ending April 4 was estimated at 10.6 million bushels (2.9 million for 2013 to '14). Soybean export sales remain above USDA's demand projection of 1.58 billion bushels. Shipments were reported at 25.7 million bushels.
USDA reported barley export shipments pace for the week ending April 4 at 27,500 bushels. No barley export sales were reported. This brings the year-to-date export sales pace for barley to 8.2 million bushels, compared with 6.1 million for last year. In the April WASDE report, USDA cut barley's old crop ending stocks estimate by 7 million bushels, putting barley's stocks at 83 million. This was because of a 5-million-bushel cut in soybean imports and a 2-million-bushel increase in exports. April 10 cash feed barley bids in Minneapolis were at $3.95 per bushel, while malting barley bids were $6.
USDA reported durum export shipments pace for the week ending April 4 at 1.07 million bushels, all going to Algeria. Durum export sales pace was estimated at 1.2 million bushels, with 1.1 million being old crop and .1 million new crop. This brings durum's export sales pace to 18.9 million bushels, compared with 16.8 million. USDA cut old-crop durum stocks 4 million bushels, putting the ending stocks estimate at 22 million. This was done by reducing durum imports by 4 million bushels. April 10 cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while the bid in Dickinson, N.D., was $7.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending April 10 with $15.30 (Canadian) gains. Canola traded with strong gains to start the week, but slipped slightly on April 10. Early support was from technical buying and from spillover strength from a stronger U.S. soybean complex. The early week strength was enough to push canola to levels not seen in four months. Late week pressure came from profit-taking as traders took profits ahead of the weekend. April 10 cash canola bids in Velva, N.D., were at $20.16 per hundredweight.
USDA estimated soybean oil export sales pace for the week ending April 4 at 3.4 thousand metric tons. This brings soybean oil export sales pace to 572.2 thousand metric tons, compared with 820.7 thousand metric tons for last year. April 10 cash sunflower bids in Fargo, N.D., were $21.25 per hundredweight.