February 9: Grain Prices Retreat after February WASDE

It was another wild day on Wall Street, with the Dow Jones whipsawing several hundred points. Here in Chicago, grain prices didn’t match the run of equity prices.

Corn, soybeans, and wheat all finished the day in the red.

Traders revisited yesterday’s WASDE report to get a sense of where prices are headed. The most important factors it seems are Chinese demand and Argentina’s supply across major crop categories.

Though Argentina got a little bit of rain today, the expectation moving forward is that yesterday’s reductions by the USDA to the nation’s corn and soybean crop are just the beginning.

Let’s dive more into grain prices at the Chicago Board of Trade.

Wheat Leads Grain Prices Lower

In Chicago, the March SRW contract shed 7.25 cents to close the day at $4.49. The Kansas City HRW contract dropped 9.5 cents to close at $4.65. The MGEX spring wheat contract for March shed 9.4 cents and pushed the price to $6.0425.

Markets were largely reacting to news that the USDA slashed its cash average price by 10 cents to a range of $4.55 to $4.65.

The downturn came despite a round of pretty interesting news. First, Russian wheat exports for January came in at their lowest level since July 2017. But that’s not the big story.

The big story – as I covered in GrainCents today – came from yesterday’s WASDE report.

While everyone was focused on carryout and Russian export totals, we saw a new country rise to the title of world’s largest wheat importer.

Indonesia is now the largest buyer of wheat – totally 12.5 MMT. That figure outpaces the 12 MMT from Egypt. While this sounds like great news for global demand, it’s not doing much to help North American producers.

Indonesia has been sourcing most of its grain from Russia and other exporters along the Black Sea.

In fact, Indonesia just announced the purchase of another 1.8 million bushels from Russia and Romania.

Let’s move on to what else was happening with grain prices today.

Traders Take Profits on Corn Prices

Today, there wasn’t a lot of news that moved the market. It appears that some traders were taking gains Friday after yesterday’s small post-WASDE pop. The March futures contract shed 3.75 cents and finished at $3.62.

The May futures contract shed 3.5 cents to finish just under $3.70.

Today, we did see a pretty interesting story out of China.

The nation canceled four U.S. cargoes in January due to the end users lacking the proper permits to process GMO corn. So, they turned around and purchased about 11.8 million bushels from Ukraine.

It’s not clear why these processors didn’t have the permits. However, as Atria Brokers explained today, this sort of news has to rattle U.S. farmers who are approaching another bumper crop.

Soybean Prices Slump

March soybean prices fell 4.75 cents to close the day at $9.875. The May contract fell to $9.935 after a 5.25-cent decline. Rain in Argentina prompted some traders to take gains.

The rains won’t eradicate the damage caused by heavy heat.

However, it could limit the problems, and offer a little bit of support to yields. With that in mind, we’re not expecting to see more showers until at least next week.

We’re keeping it short today so that we can spend more time sharing our insight for our readers of GrainCents. Tomorrow, we’ll be breaking down the WASDE report and identifying the right time to think about selling your grain.

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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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