Although the gains were incremental the wheat market was able to close higher for a 3rd day in a row yesterday but that must have exhausted the would be bulls as prices pulled back a touch overnight. We have stabilized again during the day trade but there is really not much positive news around so other than the oversold position of the market there was not much to sustain the strength just yet.
Rain coverage continues to increase across India, which of course should benefit all the crops they produce and lessens one factor that may have been a touch supportive. Strategie Grain released updated estimates for European production and have boosted the wheat crop 660k MT, projecting a total crop of 147.7 MMT. This is pushing 5 MMT above last year but they did note problems with quality in a number of countries.
Many were expecting to see a nice boost in exports sales for all commodities this week with the lower prices but it would appear, would be buyers are not becoming overly anxious in wheat just yet. For the week ending July 10th we sold 320,700 MT or 11.78 million bushels of wheat. This was a little over 5% down from last week and compares with the trade estimates of 15 to 20 million bushels.
I believe there still remains a possibility to experience a short covering bounce in the near term in wheat but with harvest progressing nicely across the Northern Hemisphere and any production issues already factored into the current price structure, headwinds will be stiff.
The last time December corn was able to gain a nickel or more in a single day was back on the 19th of June and while it was nice to see such a feat accomplished yesterday, it really accomplished little. We did not even close above the previous days highs, which is actually something we have not been able to do since the reports at the end of June.
The latest weather runs remove the heat for next week from the outlook pretty rapidly and throw in a few showers for good measure, so if that were really a fuel for the buying, that flicker has been doused. Realistically, it seemed a stretch to think we were in store for any extended heat with the pattern we have witnessed this year and the trade can go back to outguessing each other as to how big the production might be this year. Strategie Grain also boosted the estimate for EU corn production, which they now expect to be 66.4 MMT compared with their previous estimate of 65.9 MMT.
As I commented previously, the trade was looking for a pickup in export sales with the continued drop in prices and we did witness a nice bump this week. For the 2013/14 crop year we sold 573,700 MT or 22.59 million bushels versus estimates between 10 and 14 million. This was an increase of 58% over a week ago with major buyers of Japan at 246.9k MT, Columbia at 94.3k and Taiwan at 42.9k. For the 2014/15 crop we sold 459,000 MT or 18.07 million bushels, which was just above the upper end of estimates and 20% above a year ago. Time and again, the best cure for low prices is low prices.
Ethanol continues to be a stellar performer this year as for the week ending July 11th we produced another 943 million gallons using approximately 99.7 million bushels of corn. Additionally, stocks decreased 14 million gallons for the week. I just returned from the annual Kansas City Federal Reserve Ag Symposium and if there were a bright spot from any of the topics it was concerning the production of ethanol. One of the speakers was from a privately traded ethanol company and naturally you would expect him to have been positive for the outlook of his firm. That said, he pointed out that even though we have pushed against the blend wall in this country, increases in the world price of sugar and the continued high price of crude along the break in corn has placed US ethanol in a very competitive position in the export market. Hard to ague with that reasoning at least with the current values.
After struggling a bit overnight, we do have prices a into the green this morning but with the overall picture right now, it is difficult to look for much more that short-covering bounces for the foreseeable future.
November beans provided us with the first really definable rally since the end of June yesterday with a close up through the highs of the previous three sessions. Prices did cool off overnight but have moved back into the plus column now in the day session.
I find is slightly curious that one of the reasons cited for the strength yesterday in beans was the forecast for warmer temperatures next week. Unless we have developed a new strain of beans that I am not familiar with, I have always understood that beans need heat and sunshine as we move into the late July through August period. It would appear to me that with the ample moisture that we have, a warm sunny stretch would be just what the doctor ordered for the crop. I would be more concerned if we do not see that happen over the next 30-days as we could end up with great looking bushy plants with nothing in the pods.
No surprises in the old crop bean sales as we sold 37,700 MT or 1.385 million bushels. This was down 33% from the prior week. We did see an uptick in the 2014/15 sales but they were well within the range of estimates at 561,000 MT or 20.62 million bushels. This was an increase of 6.5% over the prior week. Of this quantity China purchased 365,000 MT and unknown destinations 149,500. There are persistent stories that China is still actively seeking to purchase new beans.
As I commented initially after struggling overnight, beans have pushed into higher ground again and I continue to believe we have room for additional short-covering strength from here. November futures should have room to push back against the gap levels at 11.30 but I suspect would need some kind of weather concern to move beyond there.