August 24 – Corn Prices Flat after Latest Crop Tour Results

The 2017 Farm Journal Crop Tour finished its penultimate day across the Midwest.

A record 146 scouts crossed more than 2,000 fields to give us a better understanding of whether the USDA WASDE report was full of hot air.

We break down the latest news from the farm tour and trading at the Chicago Board of Trade. Here’s our daily recap, Grain Markets Today.

Corn Prices Flat as Tour Continues 

Corn prices showed minimal gains across the board in Chicago Thursday.

The September corn futures contract at the Chicago Board of Trade was flat and finished at $3.42 per bushel. The December futures contract added 0.5 cents to close at $3.565.

According to USDA figures, export figures came in lower than expectations. Old crop corn exports topped 102,000 metric tonnes set for shipment before Sept. 1. New crop sales hit 423,322 metric tonnes during the week of August 17.

Once again, markets are eyeing the Farm Journal Crop tour, which is pushing across the Midwest this week. Corn crop estimates for the state of Illinois were large: 180.7 bushels per acre. Still, that is about 13 bushels fewer than last year’s total.

Tomorrow, the farm crop tour will conclude. Our Doug Kirk, who is traveling with the western leg of the tour, will be finishing the four-day jaunt in Rochester, Minn. We anticipate that Minnesota will reveal the largest yields on the tour.

 

There were many people hoping that the farm tour would provide some bullish sentiment in the wake of the USDA’s bearish WASDE report. As Doug explained Tuesday, this crop tour has revealed average data for the year.

Soybean Prices Rebound

Soybean prices were pushed higher on Thursday. The September futures contract added 6.25 cents to close at $9.465 on the day. The November futures contract added 8.5 cents to close a tick above $9.55.

Once again, soybean oil was pushing higher thanks to the decision in Washington to levy import duties on Indonesian and Argentinean biofuels. The government’s efforts to impose anti-dumping taxes will likely decimate the import market. The country wants to bolster domestic production to fill the expected gap in supply.

On the FJ Crop Tour, the word of the day in soybean expectations is “variability.” As Doug explained on Tuesday, we are seeing a lot of variability in pod count figures from field to field.

This is critical because it’s going to create distinct pressure on buyers in certain regions of the country. We expect that many buyers may be forced to explore deals with independent producers outside of their traditional networks.

According to a recap from Successful Farming, there have been some pretty dismal numbers in north-central Iowa where they have discovered soybean pod counts of 602 in a 3×3-foot area.

In the infamous works of Pete Meyer, SPGlobal senior grain analyst and farm tour scout, “That’s real bad.” [1]

Wheat Prices

Wheat prices were rebounding after recent weakness in the markets. In Chicago, the SRW wheat contract added 5.75 cents to close at $4.09. The December contract added 4.5 cents to close at $4.345.

In Kansas City, Hard Red Wheat contracts fared better. The September HRW contract added 7.75 cents to close at $4.055. The December contract added 7.5 cents to close at $4.33.

In Minnesota, spring wheat saw double-digit gains. The spring wheat contract for September added 11.25 cents to close above $6.50. The December contract added 11.75 cents to close a tick below $6.69.

Markets have been under pressure in recent trading session.

What has been the biggest factor?

Russia.

Always Russia.

Russian production is much larger than previously expected. SovEcon just hiked its wheat production estimate by 1 million metric tonnes to hit 78.9 MMT.

In addition, there are concerns that Russia is willing to undercut deals around the globe, and offering their grain on the cheap.

One can look at the markets right now and argue that they are oversold.

The reality though is that there are few bullish factors RIGHT NOW that are spurring much interest, particularly on the managed money side.

The spring wheat harvest is more than 50% done, and almost all of the caterwauling about how spring wheat was going to blow past $10.00 is gone now. Yes, production estimates remain low, but the MGEX futures have been falling sharply over the last month. Remember when mainstream media outlets were pushing investors to buy Wheat ETFs?

Yeah, that ETF is off more than 15% since then, and it’s sitting at a 52-week low.

We’re seeing some stability arise in Australia thanks to rains over the last week. In addition, we learned today that Japan purchased about 134,000 metric tonnes of U.S. and Canadian wheat. Iran also purchased about 50,000 metric tonnes of Australian and American wheat.

The USDA reported that export sales for the new crop year are running lower than expectations. For the week ending Aug. 17, exports totaled a little more than 386,000 metric tonnes. That is a slight uptick from this period last year, but roughly 39% off from last week.

 

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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