June 6 – Wheat Prices Pop Due to EU, Black Sea Production Worries

Warm temperatures across the EU and the Black Sea helped push wheat prices higher. Warm weather also extended across the southern Great Plains. Meanwhile, traders continued to sell off corn and soybeans as they focused on positive growing conditions and shunned speculation on trade negotiations between the United States and China.

Here’s what you need to know about wheat prices and more at the Chicago Board of Trade.

Wheat Prices Pop on Warm Weather

Wheat prices popped higher in Chicago and Kansas City thanks to dryness across Europe and Russia. Prices in both cities followed European wheat futures higher. The pop comes a day ahead of the last export sales report before the release of the June WASDE report.

In Chicago, SRW contracts for July added 9.75 cents and closed just under $5.20 per bushel. The September contract added 10 cents to close at $5.375 per bushel.

Down in Kansas City, the July HRW contract added 10.75 cents to close the day just under $5.40. The September contract added another 10.75 cents to close at $5.59.

Tomorrow, analysts expect new crop sales to come in between 9.2 million bushels and 16.5 million bushels. However, they also anticipate a reduction in old crop sales as large as 11 million bushels.

Russian exports again continue to be the dominant story in the markets. As we noted this morning in GrainCents, Russia has already shipped 38 MMT during this marketing year. That includes roughly 477 million bushels during the first four months of the year.

On the spring wheat front, we saw some small gains in Minneapolis. The July spring wheat contract added 1.25 cents to close the day just above $5.98. The September contract added 1.5 cents to close the day at $6.075.

Corn Prices Track Lower

Corn prices hit their lowest levels since late April thanks to strong weather forecasts and a lack of concern about crop quality or progress. In addition, markets didn’t care much for President Donald Trump’s decision to reject an overhaul of U.S. biofuels policy. Rejections from various Midwestern Senators and Representatives killed a deal that was expected to receive approval next week.

The July corn contract in Chicago slipped 5.5 cents to close the day a tick above $3.78.

The September contract shed 5.25 cents to end the day just under $3.88 per bushel.

The question that has started to circle around the campfire is whether this weather will push yields above the 174 bpa estimate released by the USDA in the May WASDE.

Today, the Energy Information Administration announced that ethanol production came in at 1.041 million barrels per day for the week ending June 1. Stocks increased by 634,000 barrels for the week, bringing domestic inventory levels to 21.897 million barrels.

Tomorrow, keep an eye out for the weekly crop sales report for the week ending May 31. The range of expectations sits between 31.5 million and 51.2 million bushels.

Soybean Prices Slump Again

With uncertainty about global trade, traders are instead focusing on domestic factors. Improved growing conditions fueled another round of technical selling and pushed the July AND August contracts back under $10.00 per bushel.

The July contract shed 7 cents to close the day a tick above $9.94. The August contract was off 7 cents to close at $9.995.

Tomorrow’s export sales report will be an important one ahead of next week’s WASDE report. Trade expectations for tomorrow range for total sales between 14.7 million and 36.7 million bushels. That represents a pretty wide range of expectations and we could see some volatility when trading begins on Thursday morning.

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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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