(Farm & Ranch Guide) – Wheat- Wheat traded with losses on 3 of the 4 sessions last week with all exchanges once again hitting new weekly lows. By the end of May 7, July Minneapolis dropped 3.75 cents, September Minneapolis dropped 2.5 cents, July Chicago dropped 1.25 cents, and July Kansas City slipped .75 cents.
Sessions on May 4 and May 5 had wheat trading lower. Weather forecasts continued to call for good rains for much of the Plain states. The Northern Plains has been experiencing record breaking planting progress so a little shot of rain would be almost ideal to help even up germination.
Additional pressure came from another disappointing export inspection estimate. Selling on May 5 was tied to a small improvement in winter wheat’s crop condition rating. Technically wheat is in trouble and seems determined to test the old lows from June 2010 which are $4.97 in September Minneapolis, $4.555 in July Kansas City, and $4.2525 in July Chicago.
Just as all hope of a rally was decreasing, the bulls returned to the wheat market. The May 6 session had all three exchanges trading with solid gains. A friendly Stats Canada Stocks estimate (March 1 all wheat stocks were 16.74 TMT compared to 22.35 TMT for last year) supported wheat early while additional support came from reports of poorer than expected wheat observations from day 1 of the Wheat Quality Tour. The tour’s first day yield estimate was 34.3 bushels, compared to 34.7 bushels last year.
Selling pressure returned May 7. Pressure was from another bearish weekly USDA Export Sales estimate, which showed a negative export sales estimate. It is becoming evident wheat is not going to make its export sales projection. Positions squaring ahead of the May 5 Crop Production report were also evident. Early estimates are: 2014 ending stocks: 691 MB (+7 MB from April), 2015 all wheat production: 2.098 BB (+72 MB from last year) and 2015 ending stocks: 751 MB (-12 MB than Feb Ag Outlook). The Wheat Quality tour average yield for day 2 was at 34.5 bushels per acre, 3.7 bushels above last year.
USDA estimated the wheat export shipments pace at 11.98 MB for the week ending Ma 1. This brings wheat’s year to date export shipments pace to 774.2 MB compared to 1.066 BB last year. That week’s wheat export sales pace was estimated at a negative 5.4 MB. 2015 sales were reported at 16.4 MB. This brings wheat’s export sales pace for the year to 848.0 MB compared to 1.161 BB last year. With 4 weeks left in wheat’s export marketing year, shipments need to average 26.5 MB and sales need to average 8.0 MB to reach USDA’s 880 MB estimate.
As of May 3, 75% of the nation’s spring wheat crop was planted compared to 55% the previous week and 40% for the five-year average. Spring wheat emergence was estimated at 30% compared to 16% for the five-year average. Forty-three percent of the nation’s winter wheat crop was headed compared to 34% for the five-year average. Winter wheat crop conditions improved 1% to 43% g/e, 37% fair, and 20% p/vp. This compares to 31% last year. As for the states, Colorado: +2%, Kansas: +1%, Oklahoma: +1%, and Texas: unchanged.
Corn
The corn market traded to 7 month lows last week with rapid planting progress and widespread rain. Last week’s report put corn planting at 55% complete, a 36% jump for the week and well ahead of the 10-year average at 41%. Additional weakness came from the possibility of decreased feed demand as the bird flu has now affected over 25 million head of poultry and continues to grow.
Traders are also looking ahead to the monthly USDA supply and demand report on May 12, with expectations that stocks will show an increase. As of close on May 7, the May contract was down 2.5 cents for the week, while December lost 4.25 cents.
Corn futures were slightly lower on May 4 with expectations of rapid planted progress the prior week and near ideal weather. But the futures were able to close slightly higher on May 5 with light short covering on the close and news that Taiwan bought 60,000 mt of corn. The upside reversal on May 5 created some buying interest and short covering on May 6. The double digit gains in the wheat complex and sharp losses in the dollar provided additional support. The crude oil market has also moved higher and is up close to $20.00 from its mid-March lows.
Selling pressure came back into the trade on May 7 with the reality of planting progress and widespread rain. Thirty-six % of the nation’s crop got planted for the week ending May 1 and the conditions in the wet southeastern states and Ohio Valley were drier last week for field work. There was much need rain in the western plains and more forecast for the Midwest into this week.
China also offered 3.4 mmt of corn from their state owned reserves last week and they are expected to produce a record 232 mmt of corn in 2015, up from 215.5 mmt in 2014. The ethanol report for the week ending May 8 also showed corn use down from the previous week and stocks are 21.13% larger than one year ago. The corn futures were near unchanged on the morning of Maay 8.
Ethanol production for the week ending May 1 averaged 887,000 barrels/day, down 3.69% vs. the previous week. Total ethanol production for the week was 6.209 million barrels. Corn used in production for the week ending May 1 is estimated at 93.14 million bushels and needs to average 101.044 million bushels/week to meet this crop year’s USDA estimate of 5.2 billion bushels. Stocks were 20.762 million barrels, down .17% vs. the previous week, but up 21.13% vs. last year.
For the week ending May 4, 55% of corn was planted vs. 28% last year and the five-year average of 38%. Corn emerged was at 9% vs. 6% last year and the five-year average of 12%.
USDA’s export inspection report was friendly for corn at 41.4 mb, above the 41.8 mb needed to meet USDA’s projection. Corn export sales were estimated at 33.1 mb, above the needed amount of 11.8 mb to stay on pace with USDA’s estimate of 1.8 bb. The shipments came in at 44.7 mb, above the 41.3 mb that was needed to keep pace with USDA projections.
Soybeans
As of close on May 7, July soybeans were 10.25 cents higher for the week while November soybeans were up 10.25 cents. At 10 a.m. May 8, July soybeans were down 4.0 cents and the November contract was down 4.5 cents.
Soybeans traded with strength early in the week with support tied to commercial buying in soy oil. Soy oil demand appeared better than expected as it hit a new eight week high on May 4. Soybean planting is moving along with that afternoon’s Crop Progress report showing planting at 13% compared to 9% for the five-year average. Expectations for last week were for progress in the south and the east while rain was expected to slow planting in the west. Demand continues to support soybeans with May 4 export inspections above the amount needed to keep pace with the USDA’s projection.
Soybeans finished mixed May 6 with losses in nearby contracts and light gains in the deferred months. Gains in corn and wheat spilled over to help support the soybean trade. Early in the week saw stronger soy oil trade tied in part to concerns about strikes in Argentina, but the May 6 announcement that a port strike had been called off led to weaker trade. Stats Canada released their stocks report May 6, pegging soybeans at 2.063 mmt compared to 1.419 mmt last year.
Trade moved lower again May 7 as generally favorable spring weather keeps the pressure on. Planting should be proceeding well in the south and the east while rain in the west keeps the pace slow this week. With record acreage expected and favorable spring weather bolstered by rain in the five day forecast the expectation is for a large crop.
Demand will continue to provide support to the market and last week brought another solid round of export sales. The export sales for the year are now 26 MB above the amount projected by the USDA, a projection likely to be increased in the May 12 WASDE report. Weakness in corn and wheat and strength in the U.S. dollar provided additional pressure.
USDA reported the soybean export inspections pace at 6.3 MB for the week ending May 1. This brings the year to date export shipments pace for soybeans to 1.689 BB compared to 1.523 BB last year at this time. That week’s soybean export sales pace was estimated at 12.5 MB. This brings soybean’s export sales to 1.816 BB compared to 1.640 BB last year. With 17 weeks left in soybean’s export marketing year, shipments need to average 5.9 MB and sales have exceeded USDA’s 1.790 BB estimate.
For the week ending May 3 soybeans were 13% planted compared to 2% the previous week and 9% for the five-year average.
Barley
There were no export inspections reported for the week ending May 1 for barley. That week’s barley export sales were reported at 100,000 bushels. This brings the year to date export sales pace for barley to 6.8 MB compared to 8.3 MB last year at this time.
For the week ending May 3 barley was 75% planted, up from 56% the previous week and 47% for the five-year average. Barley emergence was at 39% compared to 17% for the five-year average.
For the week ending May 7 cash feed barley bids in Minneapolis were at $2.70 and there was no bid for malting barley.
Durum
USDA reported the durum export inspections pact at 1.57 MB for the week ending May 1. That week’s durum export sales were reported at 700,000 bushels. This brings the year to date export sales pace for durum to 25.1 MB compared to 19.7 MB last year at this time.
For the week ending May 7 cash bids for milling quality durum were at $8.75 in Berthold, while Dickinson’s bid was at $8.25.
Canola
For the week ending May 7 the front month July canola contract gained $9.50 to $456.70 CD. Canola opened the week with strength as farmers focus on field work and with some regions seeing dryness concerns. CBOT soybean and soy oil futures started the week higher as well, lending additional strength to canola futures.
May 6 saw the release of Stats Canada’s stocks report. The report showed canola stocks at 7.039 mmt, below expectations and down from 8.677 mmt a year ago. The report was supportive, but canola ultimately closed lower May 6 under pressure from the stronger Canadian dollar and weakness in the CBOT soy complex. The market closed higher May 7 due to tight supplies indicated by lower than expected recent acreage and stocks numbers.
For the week ending May 7 cash canola bids in Velva increased 40 cents to $16.58.
Sunflower
USDA estimated the export sales pace for soybean oil at 15.6 TMT for the week ending May 1. This brings the year to date export sales pace for soybean oil to 678.4 TMT compared to 591.7 TMT for last year.
For the week ending May 7, July soybean oil futures were 90 cents higher to $32.49. Cash sunflower bids in Fargo were unchanged on the week at $21.
