(Farm & Ranch Guide) – Wheat traded higher throughout last week as drought conditions in both the U.S. and the Black Sea region helped to put substantial premium into all three wheat exchanges. For the week ending July 19, September Minneapolis increased 72.5 cents, September Chicago increased 87.25 cents, and September Kansas City was up 87.0 cents.
Wheat opened the week with strong gains. Wheat was supported by continued dry weather concerns, not only in the U.S. but also in Russia. The winter wheat harvest is almost wrapped up with the crop coming in at best close to average. The spring wheat crop is approaching harvest. Thoughts that wheat’s crop condition rating will show another decline helped to push wheat. Additional support spilled over from a stronger corn market as both wheat and corn fight to stay out of the feed ration.
Wheat traded mixed July 17 as the market tied to follow corn and soybeans. Corn slipped early in the session due to profit taking. Drought-like weather and decreasing crop conditions remain the primary force in the market. The commercial outlook for wheat is increasingly bullish as end users grow more concerned about the global supply of wheat. Wheat is expected to fill more feed demand due to corn prices.
The July 18 session gave wheat solid gains after opening sloppy. Early selling was tied to technical pressure as well as from spill over selling from a sloppy start to the corn and soybean complex. But as corn firmed the buying strength spilled over to wheat. By the close wheat was trading at levels not seen since 2008, as are corn and soybeans. Soybeans had enough strength to push to new all time contract highs. Wheat continues to be supported by drought conditions.
Wheat opened and traded with strength throughout the July 19 session due to spill over strength from a sharply higher corn and soybean complex. Additional strength came from a bullish export sales report. U.S. wheat exports are starting to increase due to buyers switching from Russian or Black Sea region wheat to the U.S. as the U.S. has plentiful supplies while drought conditions has depleted their supply. The dry conditions in the Black Sea region has once again spurred thoughts of export bans as those countries try to secure their own needs before putting extra bushels out for sale.
But wheat was not able to hold onto its gains throughout the session once corn slipped. Most of the selling appeared to be centered in the winter wheat exchanges and in the 2013 crop year, but in any event it did make for an ugly close in wheat in those contracts.
USDA reported the previous week’s wheat export inspections pace at 14.9 MB. That week’s wheat export sales pace was estimated at 21.6 MB.
As of July 15, 80% of the nation’s winter wheat crop had been harvested compared to 65% for the five-year average. Spring wheat heading is estimated to be 94% complete compared to 77% for the five-year average. Spring wheat crop conditions dropped 1% to 65% g/e, 27% fair, and 8% p/vp. Last year at this time the crop was rated 73% g/e.
For the week ending July 19, September corn gained 67 cents while December was up 38 cents. Hot and dry weather continues to push corn yields lower and prices higher. The forecast continues to call for blistering temperatures and the lack of any rain for the next two weeks. Ending stocks continue to shrink, but demand has slowed for ethanol and exports.
Buying interest was brisk again on July 16 as traders expected another drop in the afternoon’s crop condition report. The crop condition rating for corn dropped a whopping 9% to be rated at 31% g/e. The p/vp rating also increased to 38% and up from 30% the previous week. The report showed the p/vp rating for the following states at: Illinois – 56%, Indiana – 71%, Missouri – 72%, and Iowa and Nebraska 27%.
The market remained firm through midweek with triple digit temperatures in the western Corn Belt. Also, the Nebraska Department of Natural Resources issued notices to more than 1,100 irrigators to stop pumping from rivers and streams.
The market took a breather July 19, but did trade sharply higher in the overnight, making new all time highs in the September contract at $8.1675. The market continued to find support from blistering temperatures, which will continue to hurt yields, as well as from forecasts which called for the same weather pattern this week. The day session saw profit taking come into play after trading the December contract to $7.99 (a quarter of a cent off its all time high).
Additional weakness came from talk that Chinese importers are selling back undelivered shipments at a profit from the price increase. The export sales report was also disappointing and well below estimates. Exports have slowed dramatically once corn crossed over $7, which will likely result in USDA having to lower their export estimate for corn. Also, South Korea formally asked the U.S. to back off on the ethanol mandate to ensure corn for food. The ethanol report was also disappointing last week and production came in at a four-month low.
The ethanol production report for the week ending July 13 showed production averaged 802,000 barrels/day. This is down 2.3% vs. the previous week and down 8.1% vs. last year. Also, total ethanol production for the week was 5.61 million barrels, which is a four-month low. Corn usage for the week was estimated at 85.4 MB, as compared with 101.7 MB needed each week to reach the USDA forecast for the marketing year.
Crop conditions had 31% of the crop rated as good to excellent, 31% fair and 38% poor to very poor. Corn silking was at 71%, compared to 28% one year ago and the five-year average of 36%. Corn in the dough stage was 12%, compared to 3% one year ago and a five-year average of 4%.
USDA’s Export Inspection Report was bearish for corn. There were 21.7 MB of corn reported shipped, below the 32 MB needed to meet USDA’s projection of 1.6 BB. The Export Sales Report for corn was 7.1 MB, of which 1.3 MB was old crop and below 7.5 MB that was needed to meet USDA projection of 1.6 BB.
For the week ending July 19, November soybeans were up 99.75 cents. Longer-term fundamentals remain bullish for the soybean market as global stocks tighten. Weather remains the main force in the market.
Soybeans were higher on the session on July 16 as drought-like conditions continue to support gains. Some rain fell over the previous weekend, but it was not enough as the next week looks to be hot and dry. Above average temperatures and below average rainfall are forecasted for the next few days. The poor weather has led to deteriorating crop conditions, prompting traders to question if the current USDA yield estimate of 40.5 bpa is too high.
Demand for soybeans remains strong as the global supply shrinks. The July 16 export inspections were bullish, coming in above the amount needed to keep pace with the USDA’s projection.
The July 17 session had soybeans trading in a range from 15.25 cents down to 16.5 cents up before closing unchanged. The market is extremely overbought technically and saw investors taking some profits. Commercial traders continue to grow more bullish due to longer-term global supply concerns as indicated by the strengthening inverse in futures spreads.
The forecast remains threatening over the next week, making further reductions in crop conditions likely. Traders believe USDA yield projections may be too high.
Soybeans traded mixed through the first portion of the session July 18 before a late rally led to a new contract high at $16.220 and a sharply higher close. July 19 saw a new all-time high overnight and another sharply higher close.
Weather remains the primary factor as the next month is the most important weather period for soybean development, and the July 19 30-day forecast remains hot and dry, supporting the early gains. Yield is expected to continue to drop with global supplies already at a critical level. A sale of 112,000 mt of new crop soybeans to the United Kingdom was announced on July 19. That day’s export sales report was neutral, coming in within expectations.
USDA reported the previous week’s soybean export inspections pace at 14.3 MB. That week’s soybean export sales pace was estimated at 15.0 MB (5.0 MB old crop, 10.0 MB new crop). With seven weeks left in soybean’s marketing year, shipments need to average 12.9 MB and sales have exceeded USDA’s 1.34 BB projection.
Soybean blooming as of July 15 was at 66%, compared to the five-year average of 42%. As of July 15, soybeans setting pods were at 16% compared to the five-year average of 9%. USDA’s Weekly Crop Condition rating report estimated the U.S. soybean crop rating at 34% g/e, 36% fair, and 30% p/vp, a decrease of 6%.
USDA reported the previous week’s barley export inspections at 4,000 bushels. That week’s barley export sales pace was estimated at 1.9 MB.
USDA’s Weekly Crop Condition rating report estimated the U.S. barley crop rating at 60% g/e, 29% fair, and 11% p/vp, a decrease of 4%. Barley heading was at 95%, compared to 73% for the five-year average.
Cash barley bids in Minneapolis increased slightly last week, putting feed barley bids at $6 while malting barley bids remained at $7.10.
USDA estimated the previous week’s durum export shipments pace at 93,000 bushels. There was no durum export sales reported for that week.
As of July 15, North Dakota’s durum crop was estimated at 66% g/e, 28% fair, and 6% p/vp.
July 19 cash bids for milling quality durum were at $8 in Berthold while Dickinson’s bids were at $8.40.
Canola futures on the Winnipeg exchange closed the week ending July 19 with about $11 CD gains. Canola traded with strong gains to start the week and end the week but struggled during the middle of the week. The canola market was supported by strength from a stronger palm oil market as well as from spill over strength from the U.S. soybean complex. Commercial demand remains strong due to export pricing. Gains were kept in check by prospects for a large crop out of western Canada.
As of July 15, North Dakota’s canola crop was estimated at 76% g/e, 20% fair, and 4% p/vp.
July 19 cash canola bids in Velva were at $27.25.
As of July 15, North Dakota’s sunflower crop was estimated at 70% g/e, 28% fair, and 2% p/vp.
The previous week’s soybean oil export sales pace was estimated at 20.3 TMT with 14.3 TMT being old crop and 6.0 TMT being new crop. This brings the year to date total to 537.3 TMT, compared to last year’s 1,263.3 TMT.
July 19 cash sunflower bids in Fargo were at $23.60.
