June 18 – Wheat Prices Collapse as Harvest Progresses

Wheat prices collapsed across US exchanges thanks to a wave of technical selling and eyes on the progress of the US harvest. Corn prices were off thanks to China’s decision to slap a number of US exports with tariffs. Soybeans were the lone bright spot on the futures board.

Let’s take a look at today’s prices at the Chicago Board of Trade.

Soybean Prices Tick Higher

The price of soybeans pushed higher Monday as markets weighed the ongoing spat between the United States and China. The small uptick came after US soybeans prices shed 6% last week due to the decision by the US to proceed with tariffs on Chinese products and the ensuing retaliation by China.

As Brennan mentioned this morning in the Breakfast Brief, China will now likely pay more money for soybeans. Rabobank suggested that Chinese buyers will likely face premiums on soybeans of South American origin. Brazilian soybean port prices are already trading about 40 cents USD/bushel higher than prices in US ports. This same scenario occurred in April when China initially slapped tariffs on American beans.

The July soybean contract added 3 cents to close the day at $9.085. The August contract ended the day up 2.5 cents to close the day at $9.14.

This afternoon, the USDA released its weekly update on crop progress and quality. Planting came in at 97% complete, a figure that is 2 points higher than last week and 6 points higher than the five-year average.

The agency said that 90% of the crop has emerged. That is 3 points higher than the same period in 2017 and 9 points higher than the 5-year average.

The agency reported a small decline in crop quality. The agency said that 73% of the soybean crop was rated Good-to-Excellent (G/E). That figure was a 1 point decline from the previous week. That said, the number was 6 points higher than the same period last year. The chart below offers a glimpse of quality expectations from analysts across the country.

The USDA also released an update on US export inspections. The agency said that inspections came in at 30.1 million bushels. That figure easily surpassed trade expectations, which topped out around 23 million bushels.

Corn Prices in Reverse

US corn prices fell thanks to selling pressure tied to China’s trade retaliation. The nation’s list of products that will face tariffs includes ethanols, sorghum, and DDGs.

July corn contracts dropped 5.25 cents to close the day at $3.56 per bushel.

The September contract ended the day down 5.25 cents to end the day at $3.655.

The USDA gave its weekly update on corn quality and progress. The agency said that 98% of the crop has emerged. That is a point higher than both the five-year average and the pace from last year.

Meanwhile, the corn crop increased in quality over the last week. The agency said that 78% of the U.S. crop was rated G/E. That is a point above the state of the crop last week, and 11 points higher than the state of the crop during the same period last year.

Corn Crop Condition

Wheat Prices Continue to Slide

In Chicago, July SRW wheat contracts slumped another 9.5 cents to end the day at $4.90 per bushel. The September contract for SRW wheat ended the day down 12 cents to close at $5.015.

In Kansas City, the July HRW contract cratered more than 20 cents to end the day at $4.995. The September HRW contract dropped 19.25 cents to close the day at $5.15 per bushel.  

Wheat progress and quality were updated today by the USDA.

MGEX spring wheat contracts for July dropped 7 cents to end the day just under $5.64. The September contract in Minneapolis shed 9 cents to end the day at $5.72.

Trade expectations called for just 38% of the winter wheat crop to be rated G/E. But the USDA says the crop beat these expectations by a point, with 39% of winter wheat rated G/E. The chart below provides a glimpse of winter wheat quality across the United States.

Winter Wheat Crop Condition

Analysts also forecasted that 26% of the winter wheat harvest would be complete.

The agency, however, reported that 27% of the harvest is complete. That figure is 8 points ahead of the 5-year average. That figure is higher than the 14% reported during the previous week.

Winter Wheat Harvest Progress

Meanwhile, analysts had expected that 70% of the US spring wheat crop would be rated G/E.

The numbers blew trade expectations away. The agency says that 78% of US spring wheat is rated G/E. That figure is 37 points higher than the 5-year average of 41% G/E.

The USDA said that export inspections came in at 13.7 million bushels last week. That was off from the previous week’s estimate of 15.4 mbu. The figure falls in the range of trade expectations, but well short of US forecasts.

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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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