September 6 – Prices Push Higher at Chicago Board of Trade

Grain markets received another positive bump during their second day of trading after Labor Day. Wheat, corn, and soybean contracts all showed gains a day after the USDA released its weekly crop progress and quality report.

Earlier today, Stats Canada released its July inventory report. Below is an update for Canadian grain stocks ending July 31. Brennan took the time today to analyze July’s report against the five-year average.

july-2017-statscan-grain-stocks-bullish-canola-bearish-barley

In tomorrow’s Breakfast Brief, Brennan will dive deeper into the report and offer some insight into where he sees these figures heading in the months ahead. In addition to the August report (which will be released this time in October), we are also preparing our coverage of the September WASDE report.

After a busy day at FarmLead’s headquarters in Ottawa, Canada, I hopped on the line with a few friends down in Chicago to get a better sense of what’s happening in Chicago. Here’s our daily recap of grain trading across North America.

Corn Prices Push Higher

The December corn future contract added 2.5 cents to close the day at $3.61. The March contract added 2.5 cents to close the day at $3.735.

Today’s uptick can be tied to positive sentiment after the USDA lowered corn quality ratings on Tuesday and news that both denting and maturation numbers were below their five-year average. In addition, the USDA posted a private export sale to Mexico of 253,300 metric tonnes.

Speaking of Mexico, we have to keep a close eye on news out of Mexico City. Officials from United States, Mexico, and Canada are meeting to renegotiate the North American Free Trade Agreement. While both Mexico and Canada have expressed willingness to amend portions of the trade agreement, President Donald Trump has threatened to pull the U.S. out of the deal.

As we’ve noted in the past, about 14 million U.S. jobs are tied to NAFTA. However, Trump wants to see changes that would help bolster the U.S. manufacturing industry. As a result, many lobbyists and trade associations tied to the agricultural sector are greatly considered that the American ag sector may be used as leverage and be forced to make concessions as well.

Mexico has been surpassed by Japan this year as the largest buyer of American corn. However, we’ve seen Mexico willing to turn to South America, where corn production continues to swell and their nations are more than content to bolster a relationship with a high-demand customer.

Soybean Prices Gain on USDA Report

The Soybean futures contract for November added 2.5 cents to close the day at $9.71.

January contracts added 2.5 to close the day just under $9.81.

A few data points drove today’s trading. First, yesterday’s crop progress report showed no change to the quality of U.S. soybean production. Soybean maturity was off 1% from the five-year average.

We saw a sharp decline in quality in states along the U.S. Gulf Coast thanks to Hurricane Harvey. Should Hurricane Irma again threaten the Gulf and be as large as many expect to be, we could see rains push well into the Midwest later next week.

That puts Louisiana and Mississippi in the danger zone first. But if this skates past Florida with the magnitude and turns up in the bayou, we could be looking at a storm that travels north and affects Arkansas, Missouri, and Tennessee.

If it stays on track, we’ll be looking at impact along the east coast, including North Carolina and possibly parts of Kentucky and Tennessee depending on the path.

Wheat Prices Rally

Double-digit gains propelled spring wheat contracts in Minneapolis, a welcome sign after a slew of downturns in recent trading sessions.

The December spring wheat contract added 15.5 cents to close the day at $6.445. The March spring wheat contract added 14 cents to close the day at $6.54.

Down in Kansas City, more gains came for HRW contracts. The December HRW contract added 3.75 cents and closed the day above $4.48. The March HRW contract added 3.5 cents and closed the day a tick above $4.66.

Finally, down in Chicago, we saw a nice pop for SRW contracts. The December contract added 2.75 cents, while the March contract added 3.75 cents.

We saw some optimism after the USDA reported that the wheat harvest is 89% complete compared to the 78% average. But the bigger news was that Canadian grain stocks were well above average. July 31 stocks revealed total wheat stocks of 6.685 million tonnes, a figure that turned out to be quite bearish.

Markets were expecting about 6 million tonnes off all types of wheat.

We saw about a 70% jump in durum stocks year-over-year with the figure hitting 1.86 million tonnes. As Brennan will explain tomorrow in greater detail, the figure is about 45% above the 5-year average. Brennan will also dive deeper into flax, canola, and other wheat numbers tomorrow.

More important, he’s going to lay out his expectation for basis moving forward.

 

 

 

 

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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