April 12: Soybean Prices Rally on Thursday’s Export Report

Soybean prices pushed higher thanks to a strong export figure and optimism that the U.S. will avoid further trade disputes with China. Meanwhile, markets are speculating on the impact of weather patterns in the coming weeks.

The weather is warming up across the nation through the weekend. But we’re expecting another cold snap and the potential for snow across portions of the Midwest.

Here’s our daily recap from the Chicago Board of Trade.

Soybean Prices Whip Higher

May soybean prices surged 13 cents to close the day just under $10.61. The July contract added 13 cents as well to close near $10.72 per bushel.

It was a good day on the soybean export front.  On Thursday, the agency did report a much more positive sales report both for old crop and new crop. China was back in the market. The agency projected net sales of more than 1.51 MMT in old crop, a figure that was a weekly jump of 33%. It was 74% higher than the four-week average.

As we have noted regarding China’s reluctance to buy, we are going to see the term “unknown destinations” pop up a lot in these reports so long as the trade war winds blow. That stamp was placed on orders for 665,800 MT of old crop. China, meanwhile, picked up 254,700 MT.

But the USDA’s shipment figure disappointed.

The agency reported a marketing-year low of 419,700 MT for the week ending April 5. That figure as a 28% slump from the previous week. It was also 40% lower than the four-week average.

Up in Canada, canola prices barely flinched at the good news out of China.

May canola prices added CAD $1.50 to close just under CAD $525.00. The July contract finished unchanged at $528.00.

The China National Grain & Oil Information Centre (CNGOIC) claims that the country will experience a bean shortfall of 20 MMT if China restricts U.S. soybeans.

CNGOIC says the country will tap into its reserve stocks of soybeans (about 26.5 MMT) and 6.5 MMT of soymeal. But it will also turn to European rapeseed and rapemeal as a substitute.

This would be good news for canola prices in Canada and rapeseed prices in Europe.

We are going to talk about the ramifications of this news in our weekly recap of GrainCents on Sunday. It’s the perfect time to sign up for a free 21-day trial. This weekend, we’ll discuss how Chinese substitution will impact planting on several continents and how Canadian and U.S. farmers will fare.

But most importantly, we’ll tell you when you’ll be able to get the best price for your grain.

Learn more, right here.

Corn Exports Surge

May corn prices added 1.75 cents to close the day at $3.8875. The uptick came after exports came in this week at a marketing-year high of 1,912 MMT for the week ending April 5. That figure was a 51% jump from the previous week and a 41% increase from the previous four-week average.

The July contract added 1.5 cents to close above $3.97 per bushel.

U.S. export sales for old crop came in below trade expectations for the week ending April 5. The USDA reported old crop sales of just under 840,000 MT, a figure that was off about 26% from the same selling period in 2017.

Sales were off 6.5% from the week prior and 46% from the prior four-week average.

What About Wheat Exports?

In Chicago, wheat prices slumped after a relatively weak export report by the USDA.

The USDA reported net sales of 120,7000 MT of wheat. That figure was an 11% jump from the previous week. However, compared to the four-week average, it was a 46% drop.

Total exports for the week came in north of 436,000 MT. That was about a 2% jump from last week and a 12% increase from the four-week average. Indonesia was the top buyer at 90,500 MT. China, Philippines, Vietnam, and Mexico rounded out the top five purchasers.

In Chicago, SRW wheat prices dropped 6.25 cents to close at $4.81 per bushel.

The July contract shed 6 cents to end the day a tick above $4.98.

In Kansas City, the May HRW contract added 9.25 cents to close at $5.075. The July contract fell 9.75 cents to close at $5.26 per bushel.

Spring wheat prices didn’t fare any better today. The May MGEX contract fell 6 cents to close the day at $6.23 per bushel. The July contract shed 6.25 cents to end the day at $6.325 per bushel.

Geopolitical Winds Around Soybeans and Wheat

President Donald Trump said Thursday that he might bring the United States back to the table regarding the Trans-Pacific Partnership. The announcement comes at a time that Trump appears to be turning away from his hardline protectionist stance and considering greater cooperation among nations.

The decision to join the TPP a year after Trump pulled the U.S away from the deal table would welcome by wheat producers. As we have noted in the past, the TPP provides competitors like Australia and Canada with a distinct advantage in key export markets like Japan.

Both nations would be able to sell wheat without $65-per-tonne tariffs attached.

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About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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