August 27: Futures Prices Fall Despite NAFTA News

Futures prices in Chicago slid Monday as seasonal pressures continued to weigh on farmers and traders. The downturn was sharpest in the wheat markets, while corn and soybeans futures traders ignored a breakthrough on trade relations between the U.S. and Mexico.

As Brennan noted in this morning’s Breakfast Brief, the bearish ProFarmer Crop Tour offered little reason to doubt the bearish estimates from the August WASDE report.

Finally, the USDA announced that it will implement its Farm Aid program on September 4, with U.S. soybean farmers receiving the bulk of the payments [2].

Wheat Prices Retreat Yet Again

December wheat prices slumped 14.0 cents to start the week. The December contract closed the day at $5.225 per bushel. March 2019 SRW contracts fell under the $5.50 level. The ZWZ19 closed the day off 13.25 cents to end the day at $5.4625.

As we noted in this weekend’s GrainCents coverage of the winter wheat market, hedge funds slashed their long position in the crop, according to last week’s Commitment of Traders Report.

In Kansas City, December HRW contracts shed 16.75 cents to end the day at $5.30.

Spring wheat prices didn’t fare much better. The December spring wheat contract in Minneapolis fell 11.5 cents to finish trading at $5.30. March 2019 MGEX contracts shed 11 cents to close at $5.95 per bushel.

Today, Taiwan issued a tender to purchase a little more than 100,000 MMT of U.S. wheat by August 31.

Dryness continues to plague Europe, another topic we discussed over the weekend. The big news came from Germany’s Farm Ministry, which now puts the nation’s 2018 wheat crop at just 19.4 MMT.

That was a big cut from the 24 MMT produced in 2017.

Today, the USDA said that 77% of the spring wheat harvest is complete. That figure is 16 points ahead of the five-year average. It is also four points higher than the harvest pace in 2017.

Soybeans Ignore Mexican Trade News

Further seasonal pressures weighed on U.S. soybean prices. The November 2018 contract dropped another 7 cents to close the day under $8.50 per bushel.

January 2019 soybean contracts fell another 6.25 cents to close a tick below $8.62 per share.

Ongoing prices pressures are doing damage to canola prices as well. Today, the November 2018 canola contract dropped another CAD $4.20 to close the day at CAD $492.90 per tonne.

Markets largely ignored a breakthrough on trade between the United States and Mexico.

The reason is pretty clear: The deal doesn’t include Canada, the third member of the NAFTA framework. Any deal would require the participation of the Trudeau government. Canada’s Prime Minister recently said that he will not just sign a deal just because the U.S. and Mexico have agreed to it. There are still many hurdles to climb on trade in the months ahead.

Meanwhile, the USDA said today that direct payments will be limited to $125,000 per person. The USDA is expected to pay roughly $4.7 billion. At least $3.6 billion of these payments will be made directly to soybean farmers. The USDA will pay farmers $1.65 per bushel times 50 percent of their production.

Based on where the market goes from here, we could see an additional payment in the near future.

This afternoon, the USDA reported crop progress in its weekly report. The agency said that 95% of the soybean crop is setting pods. That is 5 points ahead of the five-year average. In addition, the agency said that 7% of soybeans are dropping leaves.

The USDA also said that 66% of the soybean crop is rated G/E. that figure is one point ahead of last week’s figure. The number also is 5 points higher than the five year average.

US Soybean Crop Condition

Corn Prices Fare No Better

December corn prices slipped again Monday. The November contract slipped 1.75 cents to close the day at $3.615.

The March 2019 contract shed 1 cent and closed at $3.74. Corn markets largely ignored news out of Mexico and instead focused on exports and rainfall across the Corn Belt.

This morning, the USDA said that total export inspections of U.S. corns hit 1.245 MMT for the week ending August 23. That figure was 13.5% higher than what we saw during the previous week. The number also was 49% higher than the same period last week.

Today, the agency also said that 68% of the corn crop is rated G/E. That figure is the same as the previous week, but 6 points ahead of the five-year average.

US Corn Crop Condition

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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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