August 11 – Spring Wheat Falls Under $7.00

It appears that producers across the country found some high-quality wheat hiding in their fields. Optimism about the conditions of the crop fueled another downturn in wheat prices, which dipped below $7.00 on the day. Crop prices were resilient despite concerns about broader market issues fueled by ongoing tensions between the United States and North Korea.

Corn prices and soybean prices bounced back a tad Friday after yesterday’s fund-driven selloff. Markets were still reacting to yesterday’s WASDE report, which surprised traders with an uptick in expected U.S. soybean production and yields. Meanwhile, the USDA cut corn yield expectations less than the consensus of analysts had projected.

Total wheat production was set at roughly 1.74 billion bushels, which topped expectations.

Here’s our recap of trading at the Chicago Board of Trade for Friday, August 11.

Corn Prices Rise

Corn prices settled higher after Thursday’s downturn.

The September corn futures contract added 3.75 cents to close at $3.60.

The December futures contract also added 3.75 cents to finish the day at $3.7475.

The USDA WASDE produced higher than expected average yields for the month of August. While everyone in corn country called the agency’s projections insane, we’ve discovered that many of the yields that pushed expectations higher had come from states outside of the 18 states profiled in the weekly crop progress and condition report.

So, blame Maryland… or the USDA’s collection methods.

We’re seeing a lot of progress in the corn harvest in Texas and Louisiana. But the headline harvest – taking place in the Midwest – is still more than one month away. You can expect a lot of focus on upcoming crop progress reports – and the September WASDE report.

Soybeans: A Dead Cat Bounce?

Like corn prices, soybean prices ticked higher, attempting to recover much of the losses after Thursday’s WASDE report.

The September soybean futures contract added 4.25 cents and closed a tick above $9.38. The November soybean futures contract gained 4.75 cents and closed at $9.45.

Despite the slight uptick, new-crop contracts are hovering near a six-week low.

On the global front, China has purchased another 4.41 million bushels of soybeans. The total is an even split between new crop and old crop.

Do you want to know how many metric tonnes are in 4.41 million bushels? Well, you should. And you can find out by using our Grain Unit Converter, right here.

Now, it’s not U.S. sales or U.S. growth that will be generating buzz in the week ahead. It’s the sheer size of the Brazilian and Argentinian crop that has people off guard. The USDA left both the figures in Brazil and Argentina unchanged this week.

As we’ve noted repeatedly in recent weeks, the crop size is so big in South America that they are running out of storage space. Farmers are just leaving corn and soybeans in the field, and local prices are incredibly low.

Wheat Ticks Lower

Spring wheat prices fell Friday to their lowest levels since June. The September contract in Minneapolis plunged more than 29 cents Friday to hit $6.74.

Meanwhile, in Chicago, the September SRW wheat contract dropped 1.25 cents and finished a tick above $4.39. In Kansas City, the September HRW gave up 7 cents to close above $4.41 per bushel.

AgChieve notes that wheat prices haven't come close to recovering since their July 5th high.
AgChieve notes that wheat prices haven’t come close to recovering since their July 5th high.

The wild price swing in spring wheat is tied directly to the harvest in the northern Plains. While some farmers are reporting lower yields than in previous years, we’re hearing that protein levels are coming in stronger than previously expected. We’re hearing reports of 14% to 16% in some areas that were previously expecting the worst.

The WASDE report indicated that spring wheat production is set at 401 million. That figure is higher than the numbers accumulated by Brennan before the report on Thursday. However, it still was a downturn from the USDA’s 423 million bushel estimate in July.

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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