USDA report is looming
Wheat The wheat market continued its downward momentum at the start of the week with Australia experiencing rainfall and export inspections continuing their dismal pace giving bears the upper hand. South Korea agreed to accept Canadian wheat June...
The wheat market continued its downward momentum at the start of the week with Australia experiencing rainfall and export inspections continuing their dismal pace giving bears the upper hand. South Korea agreed to accept Canadian wheat June 26 after halting buying last year due to concerns over genetically modified wheat.
Spring wheat conditions declined 1 percent in the good to excellent category to 77 percent. Poor to very poor conditions increased to 5 percent from 3 percent last week. Eighteen percent of the crop is rated fair. Thirty-four percent of the spring wheat crop is headed compared to 27 percent for the five-year average. Winter wheat conditions declined 2 percent to 37 percent good to excellent. Forty-one percent of the winter wheat crop is harvested compared to 33 percent for the five-year average.
Average trade guesses for the June 29 planted acreage report for all wheat acres is 47.1 million acres versus 47.34 million from the March intentions report. Spring wheat is estimated at 12.43 million acres versus 12.62 million acres in March. Winter wheat is estimated at 32.63 million acres versus 32.71 million acres in March. Average estimates for June 1 all wheat stocks are 1.091 billion bushels versus 1.494 billion bushels from the March 1 estimate.
Egypt purchased 120,000 metric tons of Russia wheat at $217.50 per metric ton. Black Sea Region prices continue to be more competitive given the strength in the U.S. dollar. The dollar has had two solid up days moving from $93.80 to $94.80.
Weekly export sales for all wheat totaled 20.7 million bushels for the 2017-18 marketing year. This puts total shipments plus outstanding sales of 204 million bushels 31 percent below the previous marketing year. Marketing year shipments total 13.1 million bushels, 50 percent below the previous year.
For the week ending June 28, July contracts for Minneapolis wheat were down 27.5 cents at $5.215, down 11.75 cents at $4.795 for Chicago wheat, and down 35.5 cents at $4.5325 for Kansas City wheat.
Trade seemed to be focusing on the highly anticipated June 29 crop report this week. June 1 corn stocks are expected to check in at multi-year highs at 5.268 billion bushels which does not bode well for the bulls. The trade is also estimating a 500,000 acre increase in U.S. planted corn at 88.56 million from the March intentions report. Some reports however, indicate that this estimate might be a bit inflated, but really it is anybody's guess.
A private Brazilian forecaster, Agroconsult, lowered the second crop corn estimates to 55.2 million metric tons from 57.0 million metric tons. This compares to CONAB's estimate of 58.2 million metric tons. They also left Brazil corn exports at 28.0 million metric tons. Agroconsult also mentioned uncertainty with transportation potentially effecting next year's fertilizer movement if it continues. Brazil's cane ethanol production is up 42 percent from last year as economics have favored ethanol versus sugar production in the past year.
Ethanol production for the week ending June 22 averaged 1.072 million barrels per day, up 0.75 percent from last week and up 5.62 percent from last year. Corn used in last week's production was at 111.7 million bushels. At this rate, corn usage for ethanol is set to easily surpass USDA's usage estimate for this year. Weekly petroleum data showed crude oil stocks declining significantly more than expected at 416.64 million barrels. Gasoline stocks rose to 241.2 million barrels which was less than trade expectations. Gasoline demand remains at the very top end of average five-year demand which bodes well for ethanol consumption.
The EPA proposed setting a 19.88 billion gallon renewable volume obligation for 2019. This proposal will allow for 15.0 billion gallons of corn based ethanol and 4.88 billion gallons of advanced biofuels up from 4.29 billion gallons in 2018.
Weekly exports remain good at 1,486,700 metric tons. South Korea purchased 207,000 metric tons of corn at $207.89 per metric ton likely from a South American seller. This buyer has been active representing South Korean feed mills.
Weather is starting to lean positive as both the six to 10 and eight to 14 day forecasts are showing hot and dry for the entire corn belt. The soil has enough moisture to withstand the heat for now but if this pattern continues into July during the pollination period, we could see these record high condition ratings begin to drop.
Corn condition ratings decreased 1 percent to 77 percent good to excellent in this week's crop progress report. This is the highest rating for late June since 1999. Five percent of corn is silking compared to 3 percent for the five-year average.
Soybeans were under pressure this past week like they have been for the past month. It has been the same tune playing on a broken record, soybeans see gains in the overnights just to give them up throughout the day and finish with a lackluster close. The trade has been on thin ice reacting to every tweet and trade article rumors that comes across the newline. The trade remained cautious the week ahead of the June 29 USDA acreage and stocks report.
Uncertainty ahead of the White House's July 6 tariff deadline has been and will continue to keep this market on edge. July 6 is the day the tariffs will start to be put in place. So, barring a good piece of negotiating between the two sides, that will be the official start of the tariff war.
The six to 10 and eight to 14-day outlooks are showing hotter than normal temps for most of the country and is starting to show a chance for lower than normal for precipitation through the Corn Belt. The market has not yet bought into this extended forecast as much of the country's crop looks good and moisture levels are still mostly adequate/surplus across much of the nation. Crop ratings continue to stay strong across the U.S. and have been strong all month since the ratings started. The greatest threat in the extended forecast seems to be the heat, especially during pollination which may be early this year.
Ratings for this time of year are the best they have been in over 20 years, and just above the 72 percent good to excellent in 2016. Soybean crop condition ratings on June 24 showed soybeans were the same as the week prior at 73 percent good to excellent. Average trade estimates were for 73 percent good to excellent ratings. The rest of the soybeans came in at 22 percent fair, and 5 percent poor to very poor. Soybean blooming was ahead of pace, and as of June 24, soybeans were 12 percent blooming versus 8 percent last year and 5 percent for the five-year average.
Commodity Futures Trading Commission data on June 19 showed the funds now net short for the first time since this winter, moving from net long 13,000 contracts to net short 13,000 contracts. They were net long 193,000 contracts just two months ago before the trade talk turmoil and good growing weather for the row crops.
For the week ending June 27, November canola futures in Winnipeg were down $0.5 Canadian at $512.90 per metric ton. The Canadian dollar was at .7479. This brings the U.S. price to $17.40 per hundredweight.
• Velva, N.D., $17.29 per hundredweight, September at $16.55.
• Enderlin, N.D., $17.51 per hundredweight, September at $17.11.
• Hallock, Minn., $17.29 per hundredweight, September at $16.78.
• Fargo, N.D., $17.90 per hundredweight, September at $17.50.
Cash feed barley bids in Minneapolis were at $2.85, while malting barley received no quote. The Berthold, N.D., bid is $2.60 and the CHS Southwest New Salem, N.D., bid is $3.00.
Cash bids for milling quality durum are $5.85 in Berthold and at $5.20 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $18.20, and October at $18.50. For the week ending June 27, soybean oil was down 20 cents at $29.01 on the July contract.