August 18 – Friday’s Update from the Chicago Board of Trade

Next week will be an important one for grain prices as the 2017 crop tour kicks off. Roughly 2,000 scouts – including our Doug Kirk – will traverse the Midwest to examine thousands of corn and soybean fields. Their goal: Offer markets the best yield and production estimates for the year.

That said, we have to remember that this crop tour has underestimated yields in five of the last six years. That’s more of a dig at the USDA than our friends in the field. But any numbers that we receive from the scouts have to be examined deeply to get a better sense of whether the agency will surprise us later. It will be very interesting to see how their figures compare to last week’s surprise WASDE, which offered an uptick in soybean yields and smaller-than-expected cut to corn yields.

In the global markets, we saw volatility cool down after White House advisor Steve Bannon reportedly resigned from his post. The CBOE Volatility Index – commonly referred to as the markets’ fear gauge – fell more than 15% on the day. Markets were bolstered by a strong consumer sentiment reading.

With all this information in focus, it was another busy day at the Chicago Board of Trade.

Here’s our daily recap from Chicago.

Corn Prices Bounce off 11 Week Low

The December contract jumped 0.75 cents to close at $3.65. The uptick came as corn prices rebounded from 11-week lows. Rain was expected across much of the Corn Belt this week, but it appears that Mother Nature was just teasing everyone with her presence. Consistent rain missed most of Iowa.

On Monday, we’ll be digging deeper into the USDA weekly crop progress report. As of last Sunday, 62% of the corn crop was rated good-to-excellent.

There wasn’t much data on the U.S. front. While total export commitments are about 13% higher than last year, commitments at sitting at 100% of USDA projections for three weeks left in the marketing year. That’s below last year’s figure and the five-year average.

On the global front, China announced it had sold 40% of the total amount of the available 2013 and 2014 crop that it had in inventory. The world – already awash in corn – is about to see another wave hit us. Argentina’s harvest now sits at roughly 85%.

Soybean Prices Tick Higher

The soybean futures contract for November delivery gained five cents to close at $9.38 a bushel.

Once again, and apologies for repeating myself, but Monday’s crop progress report will be intriguing as the crop tour kicks off. As of last Sunday, 59% of the soybean crop was rated good-to-excellent. On Monday, we’re going to catch up with Doug Kirk to offer readers an insight view of the crop tour and ask him if the USDA estimates match what he’s seeing on the ground.

Wheat Prices Show Small Gains

The September wheat contract in Chicago gained 2 cents to close at $4.14.

The wheat futures contract for December increased by 1.75 cents and closed at $4.40.

In Kansas City, the Hard Red Wheat futures contract for September added 0.25 to close just below $4.14. The December contract added 0.25 cents to close at $4.42. AgChieve offered a pretty stunning visual of the two-week reversal from the recent rally and where support levels are hovering.

Screen Shot 2017-08-18 at 3.10.50 PM

In Minneapolis, spring wheat prices declined. The September contract dropped 1.5 cents to close above $6.70. The December contract dropped 1.75 cents to close at $6.85 per bushel.

We saw a bit of bullish news on the wheat front today. The Argentine crop has dropped to 13.22 million acres, according to BAGE.

Meanwhile, BRUG reports that a private analyst has slashed its expectations for the Australian wheat crop down to 22 million metric tonnes. That’s about 7% lower than the USDA estimates.

Next week, check back for updates from the crop tour and be sure to read our latest insight on the state of farmer finances tomorrow.

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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