October 20 – Grain Prices Slump in Broad Selloff

Grain prices fell even as global markets continue to rally.

The Dow Jones surged another 140 points to record highs Friday.

Investors are bullish on the U.S. economy and the possibility that Congress will pass tax reform later this year.

But here in Chicago, the bulls couldn’t be found.

Perhaps the Cubs’ loss in Game 5 last night forced traders to sell contracts so they could pay the bookie.

Or everyone has sobered up to the bearish string of production numbers that have hit this week.

Either way, let’s dive into grain prices at the Chicago Board of Trade.

December Wheat Contracts Fall Nearly 2%

First up in grain prices, December SRW contracts were off 6.75 cents in Chicago and closed at $4.26. The March contract fell by the same amount and hit $4.445 on the board.

In Kansas City, HRW contracts for December and March were both off 6.5 cents. The first-month contract fell a tick below $4.23.

As our friends at AgChieve explain in the chart below, the December contract has been unable to break through the resistance level of $4.60 and is now challenging its support level of $4.20.

kansas-city-hard-red-winter-wheat-price-resistance
KC HRW wheat is hitting some resistance to push near contract low

 

Up in Minneapolis spring wheat prices were also down. The December contract hit $6.11 after falling 4.75 cents. The March contract fell 5.5 cents and closed at $6.24.

This was the fourth consecutive week of price downturns.

Even though export totals came in last week at their highest levels in two months, traders are eyeing global stocks. Last week’s WASDE report on 2017/18 revealed the largest inventory levels ever recorded.

What’s Happening Abroad with Wheat

Yesterday, SovEven upgraded its Russian wheat export figure to 33.9 million metric tonnes for the new year. That figure included an additional 1.5 million metric tonnes from its previous forecast.

Don’t be surprised if we see forecasts on Russian production and exports continue to increase ahead of the November WASDE report.

We’ve seen upticks this week in production expectations in Russia along with a few countries in Europe and Argentina.

No one could show any enthusiasm that the USDA’s attache in Australia cut that nation’s production expectations to 20 million metric tonnes. That figure is about 1.5 MMT lower than the numbers we saw last week in the WASDE report.

No Weather Support for Grain Prices

How low will corn prices go? It depends on the short-term supply glut.

Looking at grain prices, December contracts shed 4.5 cents and finished at $3.445.

The accelerated harvest schedule fueled Today’s downturn.

Dustin Johnson at AgYield said today many producers are choosing the cash sale route rather than putting their corn upon delayed futures contracts.

We’re hoping that these producers are not just rushing grains right to the elevator.

They should be getting their grain tested to determine the quality, and at least posting some grain on FarmLead. You never know who might be looking for certain specifications outside your traditional buying network.

Rain is expected this weekend across the Midwest. But it likely won’t affect the progress farmers have made on the harvest this week. Brain Hoops at Midwest Market Solutions told Reuters earlier today that “It’s been a good harvest week. Everyone is going like crazy until the rain starts.” [1]

Soybean Prices Dip on Harvest Pressures

The soybean harvest is also going at 1,000 miles per hour. That’s affecting grain prices across the board.

FarmLead’s Doug Kirk shared some insight over the phone after trading closed in Chicago.

It’s worth noting that Doug has been traveling across the Dakotas and chatting with farmers about our grain marketplace.

In conversation, Doug said that he’d seen a lot of talk about the harvest across the country on Twitter and other social media. There are pictures and messages everywhere. But you have to see it to understand what a frantic pace we’re seeing right now.

Driving across the Dakota region, Kirk said that in every town you see a pile of beans out in the fields. It’s not that there is a lack of storage. It’s just the breakneck harvest pace of this week.

Soybean Prices Lead Other Grain Prices Lower

Trading reflected expectations for Monday’s Crop Progress report. November soybean contracts dropped 7.75 cents and finished the day under $9.79.

Meanwhile, the January and March contracts were also off 7.75 cents.

While soybean meal prices fell by more than 1%, there was some buying in the soybean oil markets. The December contracts for soybean oil added 33 cents.

That makes two straight days of gains.

Traders anticipate an increase in demand for soy-based biodiesel heading into 2018.

Other News in Grain Prices

Canola contracts are back above the CAD $500 level in Winnipeg. Brennan will touch on the canola markets early next week.

Meanwhile, oat prices were mixed.

The December contract added .25 cents on the day. That contract will be the topic of discussion on Tuesday at FarmLead Insights as well exploring an intriguing story about Iowa cereal production.

Finally, be sure to check out GrainTests.com, sign up for the Breakfast Brief and bookmark our Insights Blog.

 

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.

Most Recent Posts
Aug. 21 – Bullish Soybean, Corn Yields (At Least Compared to USDA)
August 21, 2019 Brennan Turner
With two days of the 4-day ProFarmer crop tour in the books, estimates of soybean and corn yields from field level are looking fairly bullish, but markets, seemingly, aren't buying it yet.
October 4: Corn Prices Edge Higher With October WASDE in Focus
October 04, 2018 Garrett Baldwin
Corn prices ticked higher Thursday as traders and analysts began to speculate on next week’s release of the October WASDE report.
Accounting for Weather Ahead of Corn & Soybean Plant 2019
March 18, 2019 Brennan Turner
While the trade war is still grabbing a lot of headlines, it's the recent volatile weather that is starting to help grain prices improve.