October 26: Grain Prices Slide Across the Board

Grain prices were in the red across the board in Chicago despite some positive export numbers. Broader markets were excited about the possibility that the Trump administration could push through tax reform by the end of the year. But in Chicago, it was a different story.

Soybeans and wheat contracts were off a few cents each, while corn was stuck in that $3.50 range. Let’s take a deeper dive into Thursday’s events at the Chicago Board of Trade.

December Corn $3.50

December corn traders are stuck on that $3.50 figure. The contract closed the day off a halfpenny, while the March contract shed 0.75 cents and finished at $3.645.

While last week’s corn exports beat the high range of trade estimates, another critical voice hiked its expectations for global production in the new calendar year.

The International Grain Council (IGC) boosted its global production figure by another 5.2 million metric tonnes.

The IGC now expects 1.034 billion metric tonnes.

While the uptick appeared bearish on the surface, the analysts slashed ending stocks expectations by 5 million metric tonnes due to rising consumptions expectations.

Last week’s export total came in at 1.288 million metric tonnes. That not only beat the high-end estimate of 1.2 million, but is a 28.5% jump from the same week in 2016.

Finally, China announced it has set a corn import quota. For 2018, they’ll only take in 283.4 million bushels. Given the huge reserves that currently sit in the country, it’s hardly surprising.

However, it doesn’t help a world already awash in corn that such a major importer would set this cap.

Soybean Prices Slump Again

The post-WASDE rally for soybean prices was short-lived, and now the November contract is off 30 cents since the report. The November 2017 contract shed another 4.25 cents and closed just above $9.71. F18 contracts were off 3.75 cents.

Soybean meal contracts fell $3.30 to hit $312.10. Soybean oil prices were up 24 cents to finish at 34.5 cents per pound. Soy oil prices rose after canola prices gained CAD $2.10 up in Winnipeg.

Today’s downturn conflicted with stronger-than-expected soybean exports. The USDA reported that the country shipped 2.129 million metric tonnes for the week. That was well above the highest trade estimate of 1.8 million. It was also a week-to-week jump of 67%.

In other data, the IGC cut end stocks by 3 million metric tonnes to 39 million. Demand was driving that reduction, but it wasn’t enough to change sentiment. The world is still awash in soybeans despite planting delays in South America.

Wheat Prices Dip Lower

Here in Chicago, SRW contracts were off 3.75 cents and closed below $4.32. March contracts were flirting with $3.50 after a 3.5-cent dip.

In Kansas City, HRW wheat contracts had it worse. The first-month contract dropped 5.25 cents and finished just above $4.28. The March contract fell 5.25 cents to close at $4.46.

December spring wheat contracts were off a penny in Minneapolis. Prices closed at $6.205.

Not a lot of data to report. Exports came in at 390,600 metric tonnes for the week. That’s pretty much in the middle of the trading range.

Today’s downturn had ties to an IGC update on production. The group hiked its global production figure by a little less than 1 million metric tonnes. Total production is pegged at 748.5 million metric tonnes.

The uptick comes from expected gains in the E.U., U.S., and Ukraine.

The news complimented the other bearish factor that China has capped its wheat import quota for the year at 354.2 million bushels.

Oat Prices Slump

It wasn’t a pretty day in Chicago for oat prices. The December 2017 contract fell 13.75 cents and closed the day at $2.625. The March 2018 contract dropped 11 cents.

Speaking of oats, today at the FarmLead Insights blog, I took a deeper look at why Quaker Oats, the largest cereal producer in the world, isn’t buying any oats from local farmers.

It’s an interesting piece that explains how quickly markets have changed and how quality reputation can doom an entire state.

We also explain how Grain Testing, online marketplaces, and other new tools can change this phenomenon and allow farmers to start growing the grain they want to plant and to get the best price possible.

Check out this story and a lot more at FarmLead.com.


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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