Weather turning more threatening
Matif wheat futures surged higher this week reaching $216.25 per metric ton on the September contract. The action in European wheat futures largely has the U.S. markets following. The Turkish currency plunged against the U.S. dollar which caused Russian wheat imports into Turkey to drastically decline. This backed off Matif wheat futures in August 8 and 9 trade.
Minneapolis contracts all came within pennies or exceeded contract highs in August 7 trade. Spring wheat conditions declined 4 percent in the good to excellent category which also lent support this week. The crop is now rated 74 percent good to excellent, 20 percent fair and 6 percent poor to very poor. Thirteen percent of the crop is harvested compared to 14 percent for the five-year average. There is some trade concern that Canadian production may decrease with hot and dry weather forecasted.
August 10 is the monthly World Agricultural Supply and Demant Estimates (WASDE) report. Informa estimates other spring wheat yield at 45.4 bushels per acre, which would be a full 4.3 bushels over the spring wheat tour estimate from last week. At 13.2 million acres of spring wheat, that is a 56.76 million bushel difference. U.S. Department of Agriculture is at 47.05. If they come down two bushels to near Informa's number, that trims 26.4 million bushels.
The average trade guess for "other spring" wheat production is 601 million bushels compared to 614 million bushels in the July report. All U.S. wheat production is estimated at 1.85 billion bushels compared to 1.881 billion bushels in July. All wheat U.S. ending stocks for 2018-19 are estimated at 961 million bushels compared to 985 million bushels in July. World ending stocks for 2018-19 are estimated at 256.42 million metric tons compared to 260.88 million metric tons in the July report. The world picture is different from a year ago heading into the August report. World stocks will likely diminish but the question is by how much — 3 million metric tons, 10 million metric tons or more?
Weekly export sales for all wheat totaled 11.7 million bushels (317,100 metric tons) for the 2018-19 marketing year. Total shipments plus outstanding sales of 276 million bushels are 29 percent below the previous marketing year. Weekly shipments of 12.7 million bushels put total shipments 38 percent below the previous year.
For the week ending August 9 , September contracts for Minneapolis wheat were up 17.0 cents at $6.2975, up 8.25 cents at $5.645 for Chicago wheat, and up 11.25 cents at $5.785 for Kansas City wheat.
Corn traded in a narrow 9 cent range for the week with consolidation prior to the monthly WASDE report. $3.89 December resistance and $3.805 support continue to hold. Managed money bought back 78,000 contracts for the week ending July 31 according to the latest Commodity Futures Trading Commission data. Funds are now net short 52,000 contracts.
Demand remains a good story for the corn complex as positive numbers continued this week. Ethanol production for the week ending August 3 was 7.7 million barrels averaging 1.1 million barrels per day. This is the second highest weekly production rate on record. This is up 3.38 percent versus last week and 8.7 percent versus last year. Stocks as of August 3 were 22.923 million barrels, up 4.35 percent versus last week and up 7.38 percent versus last year. At this point USDA would likely need to increase corn usage for ethanol by a minimum of 20 million bushels for the 2017-18 balance sheet. Gasoline demand fell sharply in the past week to 9.346 million barrels per day from 9.878 million barrels per day the previous week and was 4.6 percent lower than the same week a year ago. 2018 calendar year gasoline demand is averaging 1.6 percent above last year.
Weekly ethanol exports through June are at 927.7 million gallons, up 33 percent from the first half of 2017 and on pace to shatter last year's record of 1.38 billion gallons. Brazil leads the export share at 345.9 million gallons or 37 percent and Canada was second at 159.5 million gallons or 17 percent.
Weekly export sales totaled 1,212,200 metric tons (47.7 million bushels), with 21.8 million bushels for the 2017-18 season. Total shipments plus outstanding sales for 2017-18 are now 2.359 billion bushels, 6 percent above the previous marketing year. New crop corn sales are running 54 percent higher than a year ago. These numbers continue to point to reduced stocks numbers through 2018-19.
Conab estimates the 2018-19 Brazil corn crop at 82.18 million metric tons versus 82.92 million metric tons in the July estimate. They estimate Safrina corn at 55.35 million metric tons versus 56.01 in July. The Rosario Grain Exchange estimates 2018/19 Argentine corn plantings to increase 6 percent with a 45-46 million metric tons crop.
Soybeans saw only minor buying from short covering heading into the Aug. 9 WASDE report and lower crop ratings on August 6. Crop ratings were lowered 3 percent in the good to excellent category to 67 percent good to excellent. It was somewhat disappointing gains though as Chinese Dalian bids saw its largest one-day gain in 10 years on Aug. 7. Chinese end users may be getting nervous as recent data showed soy imports into China slowing in August. There may also be a growing awareness that availability out of South America may be drying up. China is looking for other sources to get protein into their feed, so the battle is not over. It just shows how dependent they have been on global soybean production, including U.S. soybeans.
The fourth quarter is typically peak time for China to import freshly harvested soybeans from the U.S. U.S.-China tensions will keep this market on its heels for the foreseeable future until an agreement gets worked out. The stakes were raised again as the U.S. announced it will begin collecting 25 percent tariffs on an additional $16 billion in Chinese imports on Aug. 23.
Weather forecasts are for an above normal temperature outlook in the six to 10 and eight to 14 day outlooks for the northern half of the U.S.. Weather forecasts are a bit more threatening, with much of the Corn Belt forecast to have little precipitation the next two weeks, which is likely to put more stress on dry areas. This could especially hurt soybean yields where it has not rained much in the last two weeks. The best chance of moisture is in the "I" states along with Ohio. Despite the recent adverse weather, Informa Economics slightly raised their estimates for the 2018 U.S. soybean crop from 49.8 bushels per acre to 50.0 bushels per acre.
Soybean crop condition ratings on August 5 were down 3 percent to 67 percent good to excellent. The trade was expecting a 1 percent decline. The rest of the soybeans came in at 23 percent fair, and 10 percent poor to very poor. Soybean blooming is ahead of pace and as of Aug. 5, soybeans were 92 percent blooming versus 89 percent last year and 86 percent for the five-year average. Soybeans setting pods is at 75 percent versus 63 percent last year and 58 percent for the five-year average.
For the week ending August 9, November soybeans were up 1.75 cents. November soybean support is down at the Aug. 3 low of $8.835 and then 20-day moving average of $8.7325. Resistance is at the 50-day moving average of $9.1725 and then the Aug. 7 high of $9.2225. CFTC data on July 24 showed the funds taking off a few net short positions, moving from net short 61,000 contracts to net short 59,000 contracts.
For the week ending August 9, November canola futures in Winnipeg were up $14.7 Canadian at $508.7 per metric ton Canadian. The Canadian dollar was at .7683. This brings the U.S. price to $17.73 per hundredweight.
• Velva, N.D., $15.95 per hundredweight, November at $16.17.
• Enderlin, N.D., $16.64 per hundredweight, Dececember at $16.82.
• Hallock, Minn., $16.21 per hundredweight, October at $16.66.
• Fargo, N.D., $17.10 per hundredweight, September at $16.80.
Cash feed barley bids in Minneapolis were at $2.85, while malting barley received no quote. The Berthold, N.D., bid is $2.50 and the CHS Southwest New Salem bid is $2.50.
Cash bids for milling quality durum are $4.80 in Berthold and at $4.95 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $17.40, and October at $17.35. For the week ending August 9, soybean oil was up 3 cents at $28.55 on the September contract.