August 22 – Stronger Dollar Pressures Grain Prices

The global markets have a fever, and the only prescription is more speculation on monetary policy from central banks around the globe.

Grain prices were largely mixed as a stronger dollar fueled increased chatter over the upcoming annual conference hosted by the Federal Reserve in Jackson Hole, Wyoming. Bulls are looking for any catalyst right now, particularly in the weakening wheat markets.

However, with the harvest in focus, prices have been falling.

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

Corn Prices Dip as Crop Tour Progresses

The September corn futures contract dropped 3 cents Tuesday to close at $3.46.

The December futures contract also dropped 3 cents to finish at $3.60, a figure that is getting woefully close to a 12-month low.

Markets were reacting to news that crop quality had remained at 62% good-to-excellent and that corn quality had come in as expected during the Farm Journal Crop Tour during day one.

Digging deeper into the report, we saw a 10-point improvement in crop quality in South Dakota and a 7-point uptick in North Dakota. That said, there was a double-digit drop in Illinois.

Yesterday, the Farm Journal Crop Tour reported that Ohio’s average yield came in at 16.462 bu/ac. That figure topped the three-year average by more than 4 bushels. Tonight, our Doug Kirk will be among the scouts to receive figures from Nebraska and Indiana. The tour will conclude on Thursday in Rochester, Minnesota.

As Doug said yesterday, for yields in the corn and soy yields to reach their upside in the weeks ahead, it’s going to require that the late-season rains arrive to provide moisture. Unfortunately, there it doesn’t look like rains will be more widespread across the Midwest and relief may not come until next week.

Soybean Prices Tick Higher 

November soybean futures added 1.75 cents to close at $9.37. The January soybean futures contract gained 1.25 cents to finish at above $9.45. Thank you, vegetable oil prices!!!

The USDA surprised the markets by reporting an uptick in soybean quality on Monday but dropped conditions in prime growing states.  Markets also reacted to news from the Farm Journal Crop Tour that showed a decline in pod counts in Ohio and South Dakota.

On the international front, we saw an interesting report from Celeres. Analysts there projected that Brazil’s new-crop production will hit 109.1 million metric tonnes. That figure lags from the 2016-2017 figure of 113.8 million metric tonnes.

Wheat Prices Decline After Crop Progress Report

The September wheat futures contract 8 cents lower at $4.29.

Meanwhile, the Minneapolis spring wheat contract fell by double-digits and within striking distance of the 100-day moving average. Should it move into bearish territory, we could see an amplified selloff.

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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