Weather forecast pressures markets

Wheat

Wheat started the week higher with strength spilling over from continued concerns toward this year’s U.S. production. Drought conditions continue to dominate the talk for the Southern Plains states as rain systems continue to avoid Oklahoma and Texas. Northern Plain states still are seeing support from cold, wet conditions, which are keeping producers out of the fields. Iraq reportedly bought 300,000 metric tons of US and Australian wheat.

The April 26 session opened lower but recovered to trade with small gains in Kansas and Minneapolis. Pressure spilled over from a lower overnight session while additional selling came from a bearish Statistics Canada 2011 acreage intentions report, which showed a large increase in potential wheat acres in Canada. By the close, technical selling pressure and profit taking ruled, as contracts in all exchanges were forced to new lows for the session.

By midweek, wheat was trading convincingly lower. By midsession, most months were hitting their lows of the day. Pressure was because of forecasts calling for rain for much of the driest regions of the U.S. Additional pressure came from forecasts for rain in Germany and France, which should help improve crop conditions in the worst wheat areas in Europe. Some activity was focused on the rolling of May long positions as May was to be subject to delivery at the close of the markets April 28.

The April 28 session continued on the path of least resistance — lower. Pressure spilled over from a sharply lower corn and soybean market. Additional selling was tied to a bearish export sales report. Improving weather conditions added pressure. Kazakhstan officials have increased the size of the country’s wheat crop to 14.5 million metric tons compared with 9.7 million metric tons last year. This also has resulted Kazakhstan increasing the amount of wheat for export from 2 million metric tons to 7 million metric tons.

USDA reported last week’s wheat’s export inspections pace at 28 million bushels. This brings the year-to-date export shipments pace for wheat to 1.091 billion bushels compared with 759.9 million bushels last year at this time. Last week’s wheat export sales pace was estimated at a combined total of 15.3 million bushels with 9.7 million bushels old crop and 5.6 million bushels new crop. This brings the year-to-date export sales pace for wheat to 1.274 billion bushels compared with 803.6 million bushels last year at this time. With only 5 weeks left in the marketing year, wheat shipments need to average 38.8 million bushels and sales need to average 200,000 bushels to make USDA’s projection of 1.275 billion bushels.

As of April 24, 6 percent of the nation’s spring wheat had been planted compared with 5 percent the previous week, 39 percent last year and 25 percent for the five-year average. USDA’s winter wheat crop condition rating was dropped 1 percent to 35 percent good to excellent, 25 percent fair and 40 percent poor or very poor. Statistics Canada released its 2011 planting intentions report. The report estimated total wheat acreage at 24.72 million acres, an increase of 17.4 percent from last year. Spring wheat acreage is estimated at 17.98 million acres, an increase of 9.2 percent, while winter wheat acres are expected to increase to 1.69 million, an increase of 17.4 percent.

Corn

To start the week, corn traded with strong gains. Corn traded higher overnight amid weather concerns. Heavy weekend rains across the Corn Belt kept planters parked. Very little planting progress is expected to be made in the next few days as more rain is in the forecast, raising concerns about prolonged planting delays.

April 26, corn opened lower, traded both sides of unchanged and closed with small gains. The overnight session was lower because of concerns China may continue to tighten its monetary policy. The front months did firm up and traded with green numbers by midday. The weather, tight ending stocks and a firm cash market continue to be talked about. The weekly planting progress report showed that Illinois is 10 percent planted vs. 67 percent last year; Indiana is 2 percent planted vs. 50 percent last year; Iowa is 3 percent planted vs. 61 percent last year; and, as of the report, no corn was reported planted in Minnesota vs. 56 percent last year.

Corn opened lower April 27 and traded under pressure throughout the session. The market traded lower because of concerns over the Federal Reserve meeting and potential change in policy. Weather models also showed a drier trend for the western Corn Belt this week, and that triggered longs to liquidate. Ethanol production for the week ending April 22 averaged 883,000 barrels per day, which is up 3.15 percent vs. the previous week and up 6.13 percent vs. last year. Total ethanol production for the week was 6.181 million barrels. Corn used in last week’s production is estimated at 92.7 million bushels. This crop year’s cumulative corn used for ethanol production for this crop year is 3.12 billion bushels. Corn use needs to average 100.3 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 19.283 million barrels, which is down 4.02 percent vs. the previous week and down 2.03 percent vs. last year

April 28, corn opened lower then drifted to end up close to limit down. The outlook for better weather sparked aggressive long liquidation. As the market worked lower, speculators accelerated selling, forcing the market into sell stops, which only accelerated the sell-off. Federal Reserve Chairman Ben Bernanke indicated inflation was not a major concern at this time, which gave investors the green light to move more money into commodities. He also indicated no plans were in play to tighten the money supply. Export sales also were disappointing, and that added selling pressure.

Soybeans

Soybeans started the week on both sides of unchanged. Support came from a strong corn market as traders are trying to encourage producers to plant corn at all costs. That added selling pressure to new crop soybeans as traders are expecting the planting delays to result in higher soybean acreage as producers switch acres to soybeans.

The April 26 session traded with losses as profit taking and technical selling dominated the trade. Additional selling was tied to a sharply lower Canadian canola market, which was pressured by the bearish Statistics Canada acreage intentions report. The report estimates Canadian producers will plant a record amount of canola in 2011.

Soybeans opened the April 27 session lower and traded with small losses throughout the session. By midsession, soybeans were able to recover and old crop actually traded with gains at one point. But pressure returned, and that forced soybeans lower into the close. Early pressure was because of spillover selling from the other grains. Support was because of strength from a stronger crude oil market. But the losses in the other grains, along with pressure from the Federal Reserve press conference dominated the session late.

The April 27 session had soybeans open lower than expected, with most of the early pressure coming from a lower corn market and a bearish export sales report. The soybean market was able to recover late with support coming from a friendly census crush estimate. In March, 140.3 million bushels of soybeans were crushed compared with an estimated 139.27 million bushels. But the selling pressure from corn proved to be too much for soybeans. Additional selling was tied to fund selling as the funds took profits. The selling was enough to push soybeans into sell stops, which only accelerated session losses.

USDA reported last week’s soybean export inspections pace at 8.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.347 billion bushels compared with 1.304 billion bushels last year at this time. Last week’s soybean export sales pace was estimated at a combined total of 7.3 million bushels with 5.3 million bushels being old crop and 2 million bushels being new crop. This brings the year-to-date export sales pace for soybeans to 1.509 billion bushels compared with 1.363 billion bushels last year at this time. With only 19 weeks left in the marketing year, soybean shipments need to average 12.3 million bushels and sales need to average 3.7 million bushels to make USDA’s projection of 1.58 billion bushels.

Barley

Statistics Canada estimated Canadian producers are expecting to plant 7.8 million acres of barley this year, an increase of 13.4 percent from last year but 9.6 percent less than 2009. Cash barley bids in Minneapolis declined for the week, putting feed barley bids at $5 and malting barley bids at $6.30.

Durum

Cash bids for milling quality durum increased 50 cents for the week ending April 28 at $9.50 in Berthold, N.D., while bids in Dickinson, N.D., improved 15 cents to $8.65.

Canola

Canola futures on the Winnipeg exchange closed sharply lower the week ending April 28. By the close April 28, the front month closed $26.20 (Canadian) lower. April 28’s cash canola bids in Velva, N.D., dropped to $26.52 while new crop bids dropped to $24.52.

Sunflowers

April 28’s cash old crop sunflower bids in Fargo, N.D., were at $33.20 while new crop bids were $26.60.

(Source: http://www.agweek.com/event/article/id/18342/)