July 25: Wheat Prices Surge in Chicago

Wheat prices popped by 32 cents in Chicago as traders poured through the production numbers in Europe and Ukraine. The sentiment is that a smaller crop in both regions will help fuel U.S. exports. The rally in the wheat complex helped provide support to both corn prices and soybean prices.

Markets were still digesting yesterday’s announcement that the Trump administration will give the agricultural sector a $12 billion check. The administration aims to help farmers and businesses impacted negatively by the trade spat between the U.S. and China (among other countries). However, it’s hard to make the case that the news is bullish for grain prices.

Let’s take a look at the numbers from the Chicago Board of Trade.

Wheat Prices Rally on Global Production

In Chicago, September SRW prices rallied 32.5 cents to close the day just under $5.43. The December contract added 32.5 cents to close just under $5.62 per bushel.

In Kansas City, the September HRW contract added 31 cents to close the day just under $5.41. The December contract added 30.75 cents to close just above $5.66.

In Minneapolis, spring wheat prices whipped higher as well. The September MGEX contract added 32.5 cents to close just above $5.87. The December contract gained 30.5 cents and closed the day at $6.03.

Markets rallied as traders turned their attention to deteriorating crop conditions in Europe. Today, Strategie Grains slashed its expectations for the German crop by 2.1 MMT to 20.7 MMT. The agency said that its new EU output number is under 130.0 MMT. That is down from the 132.4 MMT from earlier this month.

The Spring Wheat Quality tour kicked off this week. The first estimate on yield puts production at 38.8 bushels per acre. That is one bushel higher than yields from last year.  This morning, FarmLead CEO Brennan Turner did a deeper dive into the results of the first leg of the crop tourParts of southern North Dakota and northern South Dakota (the first leg of the tour) had a five-year average of 44.7 bushels.

Finally, the USDA will release weekly export numbers on Thursday morning. Trade estimates show a range of 200,000 MT to 500,000 MT.

Corn Prices Find Gains

September corn prices added 7.25 cents to end the day just above $3.59. The December contract gained 7.25 cents to close above $3.73. The corn complex got a bit of a boost from a surge in ethanol production.

The Energy Information Administration said today that ethanol output came in 1.074 million barrels per day for the week ending July 20. This was the largest weekly ethanol output since December 22. The agency also said that stocks declined by 115,000 barrels for the week.

Tomorrow, markets will be paying close attention to export numbers. The trade estimates range from 300,000 MT to 700,000 MT for old crop and 400,000 MT to 800,000 MT for new crop.   

Soybean Prices Get Some Support

Soybean prices showed small gains in Chicago. The August contract added 2.75 cents to close just under $8.61 per bushel. The September contract added 2.5 cents to end the day at $8.66.

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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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