Soybean prices fell on Monday, while wheat prices also had another daily decline. A recent round of bearish news and wet weather forecasts are weighing on the grain complex.
The downturn came the same day that the USDA also released its weekly progress report. Here’s our daily recap from the Chicago Board of Trade and recap of the weekly crop quality report.
Corn Prices Bounce Back in Late Trading
Corn prices came back in the final hour of trading Monday to finish in the green. The September contract added 2 cents to close a tick below $3.63. The December new crop contract added 1.5 cents to close above $3.76.
The USDA reported today that exports registered at just south of 29.8 million bushels, a figure that was 22.7% lower than last week’s output.
For the crop progress report, dated August 13, the percent of corn silking across 18 states sits at 97%. That’s still behind the five-year average of 98% and last year’s 99% for this time in the calendar. The states that have been lagging are Michigan, Pennsylvania, and Wisconsin.
Now… Onto the more important numbers. The percentage of the corn crop rated good-to-excellent increased last week from 60% to 62%. While the weekly report lags last year’s rating of 74%, the news will be bearish for traders, who weren’t projecting that much of an uptick in quality.
The September contract fell 5.5 cents to close at $9.31. The November new crop contract dropped 6.75 cents to close just below $9.38.
The uptick of rain across the Midwest helped press prices lower.
We’re turning our attention to tomorrow’s NOPA crush report. Overall, the consensus analyst expectations for the July Crush at 143.004 million bushels among NOPA members. That figure would represent a decline from the same period in 2016.
Let’s dig into the USDA report: the percent of soybeans blooming in 95% of last year’s acreage (18 states) sits at 94%. This figure is in line with last year’s blooming state and tops the five year average of 93%. Soybeans setting pods sat at 79%, which is higher than last year’s report and beat the five-year average of 75%.
However, crop quality declined… which is just another opportunity for people to scratch their heads about last week’s WASDE report that projected an uptick in yield averages. The percent of soybean crop rated G-E is 59%, down one percentage point from last week.
Last week’s crop rating is off significantly from the 72% rated G-E this time last year.
Wheat Prices Slump (Yet Again)
Money managers were pulling out of wheat contracts on Monday. As Brennan noted this morning in Breakfast Brief, the number of contracts shifting from long to short was significant last week. The selloff has continued in the wake of several bearish data points on global production and high protein quality.
Before we get to wheat prices, let’s take a look at the weekly progress report. The USDA said that 97% of the winter wheat harvest is complete in the top 18 states. We’ve still got a little way to go in Idaho, Oregon, and Washington.
Meanwhile. 40% of the spring wheat has been harvested. That’s down five percentage points from last year’s crop, but well ahead of the 35% average over the last five years at this point in the calendar.
The surprise in the report: Spring wheat rated G-E increased last week 32% to 33%. Though that figure might excite some traders looking for higher protein, the question is where they’re going to find it in the drought-plagued northern Plains. Just 8% of the South Dakota spring wheat crop is rated G-E. Montana spring crop is rated 11% G-E.
That 33% G-E rating is a steep decline (or 50%) from the 66% of G-E rated spring wheat in 2016 at this point in the calendar.
Wheat prices were mixed Monday. The SRW contract for September added 1.75 cents to close at $4.41. The December contract finished up 0.75 cents on the day to close just below $4.68.
The September spring wheat contract in Minneapolis slumped 4 cents to close the trading session at $6.70. The December spring wheat contract dropped 4.25 cents to close at $6.84.
In Kansas City, the Hard Red Wheat contract for September dipped 4.5 cents to close at $4.36. The December contract fell 5 cents to close at $4.66.
Markets are still dissecting estimates from the USDA.
The agency projects a national yield average of 45.6 bushels per acre, a figure that is down seven bushels from 2016. Total wheat production is slated at 1.739 billion bushels, a figure that was 26 million higher than previous estimates.
Spring wheat output was slated at 403 million bushels, which came in 12 million bushels higher than many expected. Spring yields are projected at 38.3 bu/ac, down 2.0 bushels from the most recent report, and 9.0 bushels off from last year.
Durum production is pegged at 50.5 million, a 6-million-bushel decline from last year.
We’ve seen the largest average yield declines in Montana, which averaged 22 bu/ac, a 14-bushel-decline from last year.
The Teucrium Wheat Fund (NYSE: WEAT) fell to a 52-week intraday low Monday as traders continue to pour out of the single commodity ETF. There was a time just a few weeks ago that it was trading at a 52-week high, prompting talking heads in the financial media to push investors into wheat contracts.
Whoops. As Brennan warned in his “Wheat Markets and Prices in Hindsight” piece, this sudden enthusiasm for agricultural investment on the retail side is a contrarian indicator that we’re on the verge of finding a top in the market.