July 20 – Weather Stress Pushes Corn Prices and Soy Prices Higher

On Thursday, the weather market persisted as crop prices closed just below their daily highs. The weaker U.S. dollar also has been helping push commodity prices higher as investors wait for next week’s meeting of the Federal Reserve. Virtually no one expects that the U.S. central bank will raise interest rate next week. Instead, the speculation has centered on the possibility of a rate hike in December. Concerns about tepid inflation have many members of the central bank unwilling to pull the trigger soon.

Here’s our daily recap of Grain Markets Today and what we’re hearing around the agricultural complex.

Corn Gains as Heat Blisters Midwest 

The September corn futures contract added 8.5 cents to close at $3.91. Meanwhile, the December futures contract added 8.5 cents to end the day a tad above $4.04.

Weather doesn’t look like it’s going to be offering consistent rains that are needed. Reports indicate that we’ll see one to three inches of rain across Minnesota, the eastern Dakotas, Wisconsin, Illinois, and Iowa through Saturday. [1]

But this isn’t a slow, steady rain. Anyone who was in Chicago last night knows that it felt like monsoon season for five minutes and then turned right back into an evening sauna. It’s hot everywhere, and we’re sitting steps one of the largest lakes in the world.

This morning, the USDA reported positive export figures. Last week, the U.S. exported 678,600 metric tonnes, well within the range of analysts’ expectations.

Once again, Japan has cemented itself as a favorite customer. The nation purchased Japan purchased 263,100 metric tonnes. Mexico was second at 209,000 metric tonnes.

Soybeans Shoot Higher

The August soybean futures contract in Chicago added 13.5 cents to finish the day just above $10.13. Meanwhile, the November soybean futures contract added 14.5 cents to finish at $10.27.

Once again, we point directly at weather forecasts for this uptick.

It was a solid weekly export report for soybean producers. The USDA reported exports of 1.93 million metric tonnes. That is just below the high-end range expectation of 2.2 million metric tonnes.

Turning to Global Markets

Wheat exports surpassed analysts’ expectations last week. High-end expectations came in around half-million metric tonnes. But the USDA said that the country exported 669,500 metric tonnes for the week.

September wheat contracts in Chicago added 2.5 cents to finish a bit higher than $5.05. December contracts finished the day up at $5.29.

Hard red wheat futures contracts for September added 3.5 cents to finish $5.03. Meanwhile, in Minneapolis, spring wheat continues to push higher.  The September futures contract for spring wheat hit $7.78, a 2.5 cent gain on the day.

Once again, weather, supply, and quality remain factors.

The problems remain persistent in the Northern Plains. Brennan discussed the increasing trend that farmers are baling their hay. As many as 70% of farmers in North Dakota are doing some level of baling.

But how many acres are we talking?

It’s unclear. BRUG has heard anywhere from 5% to 30% of the acreage, which makes next week’s crop progress report and updates from the USDA that much more critical.

That said, as we explained in our Spring Wheat Conditions analysis today, it’s become a seller’s market.

The natural expectation is that the United States could turn to its NAFTA partner Canada. However, north of the Canadian border, the weather conditions do not appear to offer any relief. A recent report indicates that dry conditions continue to affect crop levels in Saskatchewan and Alberta. [1] Still those conditions are nowhere near as bad as what is happening south of the border.

As Brennan explained this morning, Canadian exports are certainly going to rise. But they can still expect competition from sources around the globe.

In Europe, Germany was expected to take the lead and allow its EU partners to brag about their ability to target African markets that are showing increased demand for spring wheat.

However, new reports indicate that market analysts remain worried about a rash of storms hitting German farms.

In Australia, a severe drought threatens crop as soil moisture levels continue to hinder production. Australia’s chief commodity forecaster recently set expected output at 24.1 million metric tonnes. However, Matthew Pattison at Nidera suggests that the markets expect that crop to fall well short at a level between 19 million and 21 million metric tonnes.[2]

That leaves Russia in an interesting situation. The spring wheat crop is expected to increase this year by 3%. While China may be having a higher-quality wheat harvest in 2017, Indonesia and South Korea are expected to source more of their grain from Russia this year.

What’s on Tap Friday

  • Brennan will be back tomorrow with more insight into the grains markets and offer farmers some tips on the recent rally in soybean prices.
  • Be sure to check out our latest analysis on the spring wheat market in our Insights channel on Farmlead.com. Our recent conversations with farmers and buyers indicate a real need for more channels to help find the bests price available for high-quality protein in this market.
  • Finally, on Saturday, we’re going to discuss the challenges that farmers face each day that distract them from being out in the field and getting work done. I want to show you something really that can bolster your profitability and let you “quit” many of the other jobs that farmers are forced to take on every day.


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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