Grain prices were mixed Thursday as traders digested the latest export data from the USDA and crop conditions across the U.S. Plains and South America.
Concerns about a potential trade war continue to rattle trader sentiment. However – as we note below – more analysts are building an argument against the rationale of restrictions and tariffs of certain agricultural commodities in China.
Here’s our daily recap from the Chicago Board of Trade.
Wheat Prices Slump
Wheat prices retreated again on Thursday thanks to a series of bearish factors.
May SRW contracts in Chicago shed 10 cents to finish a tick below $4.79 per bushel.
The July contract shed 10.25 cents and closed at $4.96 per bushel.
May HRW contracts fell 11.25 cents to close at $5.135 per bushel. The July contract shed 11.25 cent to finish at $5.305.
Spring wheat prices in Minneapolis fell 5.5 for May delivery to $6.1625. The July contract dropped 5.75 cents and ended at $6.225.
The USDA announced that weekly wheat export sales came in at 162,807 MT.
As Brennan noted in the Breakfast Brief this morning, markets have been reacting negatively to the release from the latest Allendale survey on wheat acreage.
The survey suggested 32.55 million acres of winter wheat (down 152,000 from 2017), spring wheat at 11.92 million (up 915,000 acres year-over-year), and 2.42 million acres of durum (up 114,000 from last year).
Finally, we saw that drought across the United States slipped for the sixth consecutive week. Roughly 52.1% of the United States is still facing some level of drought with the worst happening in the Southwest and Southern Plains.
Soybean Prices Pop Again
Soybean prices popped higher thanks to a solid crush number from the February NOPA report. The members crushed 153.719 million bushels of soybeans easily topped trade expectations and set a new record for the month.
May soybean prices added 8.5 cents to close just under $10.41 per bushel.
The July contract gained 8.25 cents and finished at $10.5125.
The USDA announced weekly old crop soybean sales of 1.27 million metric tonnes. That was just above the high end of trade analysts’ expectations.
That figure was about three times the size of exports from the same period last year. The figure is also well ahead of the 700,000 Mt expected by analysts. China purchased about 509,000 MT of U.S. crop, while another 200,000 MT went to unknown destinations.
China has been buying up Brazilian soybeans in recent weeks as buyers turn away from U.S. soybeans due to concerns about potential market restrictions or new tariffs on U.S. soybeans. China is expected to retaliate against the United States after the latter announced steel and aluminum tariffs in March.
We’ve argued that China has little reason to retaliate given the potential impact on its livestock industry. We’ve also noted that increasing tariffs or restricting U.S. soybeans will only drive up the price for buyers.
That sentiment is starting to trickle into the mainstream press. The USDA notes that China is set to import about 97 MMT this year, with some independent forecasts of 100 MMT. Reuters’ analyst Karen Braun explained that Brazil alone will not be able to meet the country’s demand. And ongoing challenges in Argentina are making it more difficult to find quality sources of soybeans.
Braun states that the country would have a gap of about 31 MMT of demand once it exhausts its options in South America. Given the need to source from the U.S., placing a tax on American soybeans hurts their own buyers. 
Corn Prices Dip Thursday
The May corn contract dipped 2 cents to close the day just under $3.87 per bushel.
The July contract shed 2.25 cents to finish at $3.945.
Today, the USDA reported the single largest weekly old crop sale in 24 years. For the week ending March 8, net sales came in at 2.505 million metric tonnes.
That’s three times larger than the same period in 2017. It was also a 35% jump from the previous week. In addition, export sales came in at nearly 100% higher than analysts had anticipated.
Our top buyer last week was Japan at 838,000 MT. Taiwan purchased 388,600 MT.
But we want to focus on weekly export volumes. As noted below, weekly export volumes came in strong at 1.4 million tons up 30% from the week before.
I pulled Brennan and Adrian aside earlier to discuss the distinction between the net sales figure that generated so much buzz and the weekly export figure that doesn’t receive as much attention.
As Brennan noted, the weekly shipment figure specifically focuses on actual grain shipped. The USDA has a cancellation report — some of the sales we saw reported from last week will not make their final destination. This report, however, doesn’t find itself in the headlines of Reuters or the Wall Street Journal.
Finally, we did see corn prices receive a small amount of support from an update out of Argentina. The Rosario Grain Exchange cut its latest projection for the nation’s production by 3 MMT to 32 MMT.
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