March 5: Dry Weather Continues to Push Wheat Prices Higher

Here in Chicago, no one appeared too concerned about a possible trade war around the globe.

While President Donald Trump was threatening vehicle tariffs on Europe, wheat and soybean traders were pushing May and July contracts to new highs.

While the Dow added 350 points Monday, we watched May SRW wheat prices push above $5.00, September corn hit $4.00, and July soybean prices surpassed $10.85 per bushel.

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

Winter Wheat Prices Rally Again 

In Chicago, SRW contracts added 9.25 cents to close the day a tick above $5.09. The July contract gained 8.75 cents to finish just above $5.23.

In Kansas City, HRW wheat prices for May added 11.75 cents to close at $5.455. The July contract added another 11 cents to finish the day above $5.61 per bushel.

Once again, our attention is on the lack of wet weather in the U.S. plains. At this point, we can pretty much just stop looking at the weather forecasts. It doesn’t seem that this is going to get better at any time.

The lack of rain offset concerns about a lackluster export inspections report from the USDA. The agency said that total wheat shipments came in a little north of 400,000 MT. That figure was about a 43% jump from last week. However, the figure was off 31% from last year.

Global wheat stocks around the globe are back in focus thanks to a new report from the Australian Department of Agriculture and Water Resources (ABARES).

ABARES says that China’s wheat stocks will comprise half of the global figure by 2022/23.

July Soybean Prices Top $10.85

It was another big day for soybean prices as markets continue to monitor dry weather in South America. The May contract added 6.5 cents to close the day at $10.775. The July contract added another 6.5 cents to finish just under $10.86 per bushel.

We saw a rather positive report from the USDA today on export inspections. The agency pegged last week’s shipments at 990,113 MT for the week ending March 1.

That report complemented last Friday’s commitment of traders report, which indicated that managed money is holding a big long position on soybeans. All said hedge funds are holding 147,380 contracts.

Of course, the big focus this week centers on the WASDE report.

We tackled our expectations for Argentina at GrainCents over the weekend.

The question is how much the USDA will cut its production figure by.

Last month, the USDA said that Argentine production would be 54 MMT.

Just last week, the Buenos Aires Grain Exchange projected a crop production number of 44 MT. Informa also projects that figure to come in at 44 MMT.

And the average trade analyst has set the target for 48.5 MMT.

That would be a 5.5 MMT cut, and the largest we’ve seen in a long time.

We’re taking the conservative approach here, as the USDA doesn’t have a history of cutting production numbers by 10 MMT at a time.

September Corn Prices Hit $4.00

It was another banner day in the corn markets. Prices pushed higher thanks to support from other crop categories.

The May contract and the July contract both added 2 cents to close at $3.8725 and $3.945, respectively. The chatter today in the corn complex centered on Brazil and the upcoming WASDE report on Thursday.

We’re expecting that the USDA will make a small cut to Brazil’s acreage and production numbers, but it’s unclear just how much is coming.

The current trade estimate is set at 91.6 MMT. The USDA said last month that Brazilian production would come in at 95 MMT.

I’ll set the guess on the USDA at 93.5 MMT. It’s not a big cut, and it will likely disappoint.

But taking a page out of history (as we did with soybean production cuts over the weekend), I don’t see the agency going too crazy with their reductions. AgRural, however, is more than happy to be aggressive in their figure. They recently set their total crop production figure at 89.9 MMT.

Today, the USDA released a lackluster weekly report on corn export inspections. The USDA said that 947,642 MT was shipped for the week ending March 1. That was a 28% weekly decline and about a 35% drop from the same period last year.

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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