Grain prices dipped lower in Monday’s trading session as markets prepare for the release of the weekly USDA crop progress report. Corn prices, soybean prices, and wheat prices all slipped
Here’s a recap of trading at the Chicago Board of Trade and an analysis of the USDA crop progress report for July 31.
Corn Prices Slide, Crop Conditions Worsen
The September corn contract finished the day down 3.5 cents to close above $3.70, The December corn futures contract dropped 3.25 cents to close at $3.84. Mild weather reports offset a huge export sale of new crop to U.S. trading partner Columbia.
The decline came after Export Inspections reported that corn exports for the previous week increased to 989,195 MT. Despite the uptick, that figure is still 13.5% lower than this point last year.
Consensus expectations called for about a 2% jump in crop quality due to recent rains in the Midwest. But improvement did not come.
The percentage of corn crop rated good-to-excellent (G-E) fell from 62% to 61% over the last week. The G-E rating is well below the 76% rating this time last year.
Brennan and I took a deeper look at July grain prices over the weekend. Be sure to check it out as we start to look ahead to the August WASDE report.
Looking ahead, we’re paying close attention to spot prices in central Brazil, where a massive glut continues to exist and farmers are struggling to store their grains. As Bloomberg explained earlier today, Brazil is sitting on a record crop.  That has set the stage for a big showdown between the United States and Brail – and the possibility of much lower prices.
Meanwhile, the European Union hiked its import expectations to a record high. According to Agrimoney.com, the European Commission pushed its figure up another 3.0 million tonnes to hit 15.3 million tonnes. The previous record happened in 2007-08, when it reached 15.09 million tonnes.
Soybean Prices Dip Ahead of Crop Report
Soybean prices also slipped Monday ahead of the USDA crop progress report. The August soybean futures contract dropped 6.25 cents to close at $9.945 on the day. Meanwhile, the September contract dropped 6.5 cents lower to finish at $9.995 per bushel.
Prices followed other oilseed futures contracts lower. November canola contracts were pushing lower, while European rapeseed is off from its recent two-week high.
On the export front, the USDA reported a weekly decline of 15.75% to 476,186 MT. That figure is nearly 20% lower than the same time last year, despite strong demand from China.
In the crop progress report, consensus expectations called for about a 2% jump in crop quality.
And, analysts were fair in their estimates. Last week, soybean crops rated G-E rose from 57% to 59%. Still, this figure is well below the 72% reported during this period in 2016.
Wheat Prices Dip, Harvest Quality Slumps
The September wheat contract at the Chicago Board of Trade dipped 6.5 cents to finish the day just above $4.74. The December contract dropped 6.25 cents to close below $5.00.
The USDA reported that the Winter Wheat harvest is nearly complete. Roughly 88% of the crop has been collected, matching the same percentage from this time in 2016. The largest gains were made in Michigan, Montana, and Washington, although the latter has a long way to go. Seven states – Arkansas, Illinois, Kansas, Missouri, North Carolina, Oklahoma, and Texas – have all reported they have finished the Winter Wheat harvest.
Meanwhile, the Spring Wheat harvest is nearly halfway complete in South Dakota, where crop conditions have been abysmal. Just 8% of the state’s spring wheat is rated G-E. Overall, 9% of the spring wheat crop has been collected, in line with the progress made during the same period in 2016.
The major difference between 2016 and 2017 in the Spring Wheat market is obviously quality. Just 31% of the Spring Wheat crop is rated G-E across the six major producing states. That figure represents a 2% decline from the previous week. Looking ahead, scattered showers will be the norm across the country to accompany hot, dry weather. Don’t be surprised if that USDA figure continues to decline in the weeks ahead.
The question is: How much is that anticipated decline priced into the market?
On the export front, we saw a 15% increase in exports from the previous week. Still, 578,649 MT of wheat exports was off 13.5% from last year.
In the international market, the daily chatter centered on Egypt’s import expectations. The nation’s supply ministry said it will bolster wheat imports to 7 million metric tonnes for the 2017/18 marketing year. That’s a 12.9% jump from last year’s final number of 6.2 million metric tonnes.