Weather concerns continue to drive markets

(Farm and Ranch Guide) – Wheat – Wheat started last week with large gains due to weather concerns but slowed down toward the end of the week with position squaring ahead of the May 9 USDA May Crop Production report the main feature. For the week ending May 8, July Minneapolis gained 30.75 cents, Sept Minneapolis increased 30.25 cents, July Chicago gained 19.25 cents, and July Kansas City increased by 20.75 cents. USDA’s May Crop Production report was friendly wheat as it estimated all wheat ending stocks at 540 MB compared to the average trade guess of 550 MB.

Sessions on May 5 and 6 brought strong gains to all three of the wheat exchanges. Weather again took center stage as weekend rains in the Southern Plains were nonexistent while temps were off the chart. Additional support was also due to slow planting progress in the Northern Plains. Continued concerns about the Ukraine/Russian conflict added buying strength. Gains were kept in check by Stats Canada’s March 31 Stocks report, which put all wheat stocks in Canada at levels not seen in over 20 years. Stats Canada estimated Canada’s wheat stocks at 21.25 MMT, 47% higher than last year at this time.

Wheat continued its bull run as traders continued to price in a weather premium. Hot dry temps in the Southern Plains which has severely hurt the potential yield for hard red winter wheat (which accounts for about two-thirds of the U.S. wheat supply), continues to give traders confidence to buy wheat. Additional support is coming from plating concerns in the Northern Plains, as cold wet conditions slow planting progress in North Dakota and Minnesota. So far those two states are running about equal to their pace last year, but dramatically less than the five-year average pace. Light support was due to position squaring ahead of the May 9 USDA Crop Production report.

May 7-8 sessions brought cooler heads to the wheat exchanges, as the market took a breather from its impressive rally. After trading to 13-month highs, technical selling pressure stepped into pull wheat off of its highs. Improving weather forecasts, which are calling for rains and cooler temps, added to the pressure. Light selling was also tied to reports that Putin has agreed to pull troops off of the border ahead of the May 25 election.

USDA estimated wheat export shipments pace at 19.8 MB for the week ending May 2. That week’s wheat export sales pace was estimated at 16.4 MB with 11.8 MB being old crop and 4.6 MB being new crop. With 4 week’s left in wheat’s export marketing year, shipments will need to average 28.8 MB and sales need to average 3.8 MB to make USDA’s expectations of 1.175 BB.

As of May 4, 26% of the nation’s spring wheat crop had been planted compared to 41% for the five-year average. Spring wheat emergence was estimated at 7% compared to 17% for the five-year average. Twenty-nine percent of the nation’s winter wheat crop was headed compared to 35% for the five-year average. Winter wheat crop conditions declined 2% to now rated 31% g/e, 31% fair, and 38% p/vp.

Corn

The corn market firmed up early last week with slow planting progress being reported in the May 5 USDA report. Export sales have also been good, but news of cancellations slowed buying interest late in the week. Traders were also looking ahead to USDA’s supply and demand report that was released on May 9. As of close may 8, the July contract was up 17.25 cents for the week, while the December contract gained 17.5 cents. Shortly after the WASDE report was released corn was trading with 5.0 cent losses in July and 8.0 cent losses in December.

Corn traded with decent gains on May 5-6. Early support in the week came from the double digit gains in the wheat futures and unrest in the Ukraine over the weekend, with conflict in the port of Odessa. The planting progress report also came in at the low end of estimates and 13% below the five-year average, with 29% of the corn planted as of May 4. The weather forecast is being closely watched and calls for widespread rain to end the week that will send the planters back to the shed.

Buying interest in the corn market slowed on May 7 and closed slightly lower and near unchanged on May 8. Traders were looking ahead to the May 9 USDA report. Expectations are for a slight drop in stocks to 1.314 bb vs. 1.331 bb last month, while 2014 production is being estimated at 13.925 bb and a stocks estimate of 1.672 bb. The ethanol report also showed a drop in corn usage for the third week in a row and there was an announcement of 220,000 mt of corn export cancellations. Talk of rapid planting through the Corn Belt last week added additional weakness.

In the May 9 May WASDE report the USDA lowered old crop corn ending stocks to 1.146 BB from 1.331 BB in April. New crop production was pegged at 13.935 BB with a carryover estimate of 1.726 BB. Globally, old crop ending stocks for corn were increased to 168.42 mmt from 158.0 mmt in April while new crop was estimated at 181.73 mmt.

Ethanol production for the week ending May 7 averaged 894,000 barrels/day, down .45% vs. the previous week. Total ethanol production for the week was 6.258 million barrels. Corn used in that week’s production is estimated at 93.87 million bushels and needs to average 99.153 million bushels/week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 17.14 million barrels, down .42% vs. for the week ending May 2.

The crop progress report showed 29% of the corn is planted vs. 11% one year ago and a five-year average of 42%. Emergence is at 7% vs. 3% one year ago and a five-year average of 13%.

USDA’s export inspection report was bullish for corn at 48.8 mb vs. the 36.0 mb needed to keep pace with USDA projections of 1.750 bb. Corn export sales were estimated at 6.4 mb, which was above the .9 mb needed to stay on pace with USDA’s estimate of 1.750 bb. The shipments came in at 55.7 mb, above the 36.5 mb that was needed to keep pace with USDA projections.

Soybeans

As of close, on May 8, July soybeans were 1.25 cents lower for the week while the November contract gained 1.5 cents. Ten minutes after the release of the USDA’s WASDE report on May 9 July soybeans were trading 2.0 cents lower and the November contract was down 2.5 cents.

Soybean trade was quiet May 5 on the way to moderate losses in nearby contracts and small gains in the deferred. Commercial selling pressured the old crop while tight supplies continued to provide underlying support. As Chinese demand has slowed so have exports, with inspections on May 5 light but still just above the amount needed to keep pace with the USDA’s projection. The new-crop November contract remains strong as it continues to ignore expectations for record high plantings.

Soybeans traded lower on May 6 and 7 amid commercial selling as the July/November spread continued to unwind, slipping to 55 cents off the high of $2.80. Old crop soybean supplies remain tight, but trade is expecting additional South American cargoes to be diverted to the U.S., as well as watching for the possibility of further cancellations from China. Planting weather was favorable last week for much of the Midwest, but some concern remains that corn planting delays in the northern states could result in more soybean acres, adding to planting acreage that is already expected to be record high.

Soybean trade was higher May 8 with commercial buying returning as the market hit its lowest levels in five weeks and traders positioned ahead of the May 9 WASDE report. May 8 export sales and shipments were decent. Shipments have now reached 98% of the USDA’s projection while sales still rest 4% above the USDA’s estimate. The USDA also announced a sale of 140,000 mt of new crop soybeans.

USDA’s May WASDE report was released May 9. Old crop soybean ending stocks were lowered to 130 MB from 135 MB in April. New crop production was estimated at a record 3.635 BB, with an ending stocks estimate of 330 MB. World ending stocks for old crop were lowered to 66.98 mmt from 69.42 mmt last month while new crop was estimated at 82.23 mmt.

USDA reported soybean export inspections pace at 3.7 MB for the week ending May 2. This brings the year to date export shipments pace for soybeans to 1.523 BB compared to 1.253 BB for last year at this time. That week’s soybean export sales pace was estimated at 2.0 MB (1.5 MB for 2013/2014). Soybean export sales remain above the USDA’s demand projection of 1.580 BB. Shipments were reported at 4.9 MB.

Planting progress as of May 4 had 5% of the U.S. soybean crop planted compared to the five-year average of 11%.

Barley

As of May 4, 46% of the nation’s barley had been planted compared to 44% for the five-year average. Barley emergence was estimated at 17% compared to 16% for the five-year average.

Stats Canada’s March 31 Stocks estimate was negative barley as it put Canada’s barley stocks at 4.4 MMT, an increase of 43% from last year.

USDA reported no barley export shipments or sales for the week ending May 2. This brings barley’s export shipments pace to 7.3 MB compared to 6.38 MB for last year. Barley’s export sales pace is at 8.3 MB compared to 6.2 MB for last year at this time.

Cash feed barley bids on May 8 in Minneapolis were at $4 while malting barley bids were at $6.

Durum

As of May 4, 1% of North Dakota’s durum crop was planted compared to 14% for the five-year average.

USDA reported durum export shipments pace at 1.079 MB with all of the bushels going to Italy. No durum export sales were reported for the week ending May 2. This brings the year to date export sales pace for durum to 19.7 MB compared to 20.1 MB for last year at this time.

Stats Canada’s March 31 production estimate was bearish durum estimating durum ending stocks at 3.9 MMT, a 32% increase over last year.

May 8 cash bids for milling quality durum were at $7 in Berthold, while Dickinson’s bid was $7.25.

Canola

Canola futures on the Winnipeg exchange closed the week ending May 8 with 50 cent losses. Canola started the week off under pressure from a bearish Stats Canada March 31 Stocks estimate, which estimated canola stocks at an all time high. Canola was able to recover late in the week with support spilling over from a higher U.S. soybean complex as well as from strong commercial buying from end users. Late planting concerns added support.

Stats Canada’s March 31 Stocks report was bearish for canola. Canada’s canola stocks were estimated at a bearish 9.02 MMT, a 99% increase over last year.

As of May 4, North Dakota producers had 1% of the state’s canola planted compared to 13% for the five-year average.

May 8 cash canola bids in Velva were at $21.05.

Sunflower

Stats Canada’s March 31 Stocks estimate was friendly to sunflowers. Sunflower stocks were estimated at 25 TMT, 53% less than last year.

USDA estimated soybean oil export pace at 7.7 TMT for the week ending May 2. This brings soybean oil export sales pace to 591.7 TMT compared to 832.7 TMT for last year.

Cash sunflower bids in Fargo were at $21.35 on May 8.