August 23: Soybean Futures Show Big Losses for Second Straight Day

Soybean futures contracts in Chicago showed large declines for the second straight day after another selloff in soybeans fueled a sharp downturn in prices. The combination of harvest pressure and geopolitical tensions continue to weigh on futures prices across the grain industry.

Corn prices and wheat prices also retreated despite more upbeat export numbers.

Here’s more on what happened at the Chicago Board of Trade on Thursday.

Soybean Futures Slump in Chicago

November soybean futures contracts fell 16.25 cents to close the day at $8.56 per bushel. The January contract lost 16.25 cents to end the day at $8.67 per bushel.

On Thursday, I chatted with FarmLead’s Doug Kirk on the state of the U.S. soybean crop. Kirk noted that the 46-cent spread between the November 2018 contract and the July 2019 contract signals that the market isn’t looking for more beans in the short term.

Doug raised concerns that prices will continue to decline as the harvest picks up.

On Thursday, the USDA reported old crop sales of 152,700 MT. That figure represented a 14% increase from the previous week. However, the number was off 37% from the same period last year.

Meanwhile, new crop sales came in at 1.15 MMT.

U.S. soybean exports came in at 626,500 MT, a figure that represented a 7% increase week-over-week.

US Soybean Futures

We are now tracking 2.9 MMT behind the USDA’s updated forecast. Thus, with three weeks left in the 2017/18 crop year, actual exports need to average 961,000 MT each week to reach the target.

Canola Prices Drop Again

November canola contracts faced sharp pressures thanks to soybean price declines in Chicago. The November contract fell by CAD $5.00 to hit $496.60 per ton. The January contract was off CAD $4.70 to end the day at $503.20.

This afternoon, I reached out to our Mike Wasylyniuk up in Canada for some insight into the state of the canola crop. Dryness across Canada continues to hit canola production.

Mike said that farms that traditionally report 50 bushels per acre are coming in around 40 bushels. Farms that are up in the 55-bushel range are also reporting lower production. A downturn of about 25% from last year’s production appears to be the average decline.

Canola prices remain under pressure due to the ongoing trade war between the United States and China as soybean prices move lower. “It will be interesting to watch what happens with this trade war,” Mike said, highlighting that there remains uncertainty on whether China will look for more soybean substitutes like canola.

Corn Prices Decline In Chicago

On Thursday, the USDA reported old crop sales of 173,400 MT. That was a 49% drop from the previous week and a 55% decline from the four-week average.

New crop sales came in at 1.054 MMT.

The USDA reported exports of 1.313 MMT, a figure that was 8% higher than the previous week.

US Corn Weekly Exports

The top five destinations for U.S. corn were Japan (363,600 MT), Mexico (273,600 MT), Colombia (145,200 MT), Taiwan (90,600 MT), and Indonesia (73,500 MT, all late reporting).

We are now tracking 6.2 MMT behind the USDA’s latest export forecast of 61 MMT. With 3 weeks left in the 2017/18 crop year, actual exports need to average 2.1 MMT weekly to reach the target.

Wheat Prices Fall Again

It was another day in the red for wheat contracts across the United States. December SRW contracts shed 3.5 cents to close the day a tick under $5.42 per bushel. The March contract shed 4 cents to close the day at $5.645 per bushel.

December HRW contracts were off 2.75 cents to close the day just above $5.545 per bushel. The March 2019 contract lost 3.25 cents to end the day just under $5.79 per bushel.

This morning, the USDA reported new crop wheat sales of about 240,000 MT. That figure was off 70% from the previous week, and about 49% lower than the four-week average.

The USDA reported exports of 460,300 MT. That number is nearly identical to last week’s figure and a 15% increase over the four-week average.

All Wheat Weekly Exports

The top five destinations for U.S. wheat were  Japan (142,100 MT), Yemen (84,000 MT), Indonesia (76,000 MT), Nigeria (49,700 MT), and Chile (45,000 MT).

Spring wheat prices also fell on Thursday. The December MGEX contract was back under $6.00 per bushel after a 4.25-cent decline.

In my conversation with Mike in the Great White North, he said that spring wheat premiums have evaporated due to the large flow of high-protein wheat. There is a lot of 15% or higher protein numbers coming in, and premiums have slumped about 75% since earlier this year.

Premiums of eight cents were common during the winter. Today, you’re lucky to get two cents.

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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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