July 25 – Weather Sinks Corn Prices Again

On a mild day in Chicago, grain prices traded sharply to the down side. The downturn came despite news that U.S. crop conditions fell again last week. With cooler temperatures and rainfall in the forecast, traders were taking grains off the table. Despite downturns in crop quality, the markets appear focused on the August WASDE report and quality testing around the Northern Plains.

Here’s a recap of events happening at the Chicago Board of Trade on Tuesday, July 25.

Corn Prices Dip, Quality Slips

The September corn futures contract declined 8.5 cents Tuesday to finish the day at $3.68.

The December corn contract dropped 8.5 cents to end trading at $3.82.

Rain has fallen across Missouri and Kansas, while triple-digit heat has dissipated across Nebraska and other portions of the Midwest. But we have to consider the limited impact of rain in places where temperatures remain high. Remember, putting even a half inch of rain into a furnace isn’t going to make a dent. (Nod to our Doug Kirk for his observations on the ground).

There was good market analysis released today by Dr. John Newton at Farm Bureau, who assesses the possibility of worsening conditions in the corn crop market. Farm Bureau explores the implications of a 5% decline down to 159 bushels per acre, calculating that overall production would decline by one billion bushels compared to current expectations.

Soybean Prices Pushes Above $10.00, Then Falls

The August Soybean futures contract started up on the day four cents but quickly slumped in afternoon trading. The contract finished down 16 cents to close at $9.81.

The September futures contract dropped 16 cents to finish at $9.92.

Markets reacted to yesterday’s crop progress report which indicated that 57% of the soybean crop was rated good-to-excellent. That figure was down from 61% last week. According to Reuters, analysts had expected a reading of 60%.

Wheat Prices Fall More than 4%

Wheat prices in Chicago were sliding as sorely needed rains remain in the forecast across the Midwest and northern plains. The SRW contract in Chicago traded 14.75 cents lower to finish the day at $4.74.

In Minneapolis, September Spring Wheat contracts finished down 33 cents to finish at $7.17. The December futures contract fell 31.5 cents, or 4.5%, to finish the day at $7.27. Meanwhile, the July Hard Wheat contract fell 13 cents to finish at 4.23.

Down in Kansas City, the September wheat contract fell 13.25 cents to finish at $4.74. December contracts still remained above $5.00, but fell 13.25 cents on the day.

According to Commodity Weather Group, wheat yields are looking a little better than expected in North Dakota, where weather and worsening crop conditions have been the theme for the better part of the summer. [1]

The topic of bread was one that circled around our FarmLead offices. That was an interesting discussion because I’d just read a piece on the impact of higher flour prices on bakeries across North America. The Review covered the impact of rising input prices, which are just being passed onto the consumer. Naturally, consumers aren’t too pleased with the price increases. [2] Newton doesn’t see any scenario where a 20% decline can occur. Such a downturn would rival yields in 1988 and 2012.

 

 

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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