It was a mixed day of trading in Chicago as the snowy weather finally left town, and markets turned their attention to weekly export data. In Kansas City, winter wheat prices showed the stronger gains out of the grains complex. Corn and soybean prices ticked lower in Chicago thanks to a little bit of profit taking.
In addition, traders appear concerned about the impact of ongoing trade tensions between the U.S. and China. Many people believe that recent exports sales and shipments are not sustainable given changing expectations to trade flows and demand.
Here’s our daily recap of grain prices from the Chicago Board of Trade
Winter Wheat Finds Gains
Kansas City wheat prices for May added 6.5 cents on the day to close above
$4.95 per bushel. July KC wheat prices added 6.75 cents on the day to close at $5.145 per bushel.
In Chicago, winter wheat prices showed smaller gains. The May SRW contract added 1.5 cents on the day to close a tick under $4.77. The July contract added 1.5 cents to finish just under $4.91 per bushel. Winter wheat prices ticked higher despite forecasts for rain across the Plains and reports that drought conditions in the U.S. have declined for the 12th consecutive week.
The USDA reported a net cancelation of roughly 66,850 MT for old crop exports for the week ending April 12. Japan slashed 65,000 MT from its orders.
New crop sales, however, topped expectations. The agency reported sales of 240,410 MT. Japan was the largest buy at roughly 102,000 MT.
Total exports came in at 452,1000 MT, a 4% jump from the previous week and a 9% increase over the 4-week average. The Philippines led the way last week with 145,500 MT of wheat. Mexico and Japan were the second- and third-largest recipients, respectively.
Corn Prices Slip
May corn prices were off a penny to close the day at $3.82 per bushel. The July contract shed 0.75 cents and ended at $3.91.
Today, the USDA reported total sales of 1.091 million MT, a 30% jump from the previous week. However, that number was about 4% down from the 4-week average.
Total exports for the week came in at 1,594 MMT, a 17% decline from the previous week. Still, that figure is about 8% higher than the 4-week average. It was good to see that Mexico was the top destination as the U.S. continues to renegotiate NAFTA with the country. Japan, South Korea, Colombia, and Taiwan rounded out the top five destinations for U.S. corn last week.
On the global front, we’re still watching developments out of China. One of the country’s largest grain processors has signed a deal to build an ethanol plant in Mongolia. The facility is expected to have the capacity to process about 36.4 million bushels of corn each year. The location
Soybean Prices Continue Slide
May soybean prices fell 4.5 cents to close the day just above $10.37. The July contract shed 4.25 cents and finished at $10.49 per bushel.
The USDA reported net weekly sales of old crop today. The figure: 1.041 MMT. This was a 31% drop from the previous week, but still a double-digit bump from the 4-week average. We saw a big amount of sales to unknown destinations (581,000 MT). Mexico also purchased nearly 130,000 MT. Reductions from China were reported at nearly 53,000 MT.
New crop sales were strong at 1.091 MMT. China purchased a whopping 321,000 MT of U.S. soybeans, while Mexico and Argentina both ordered at least 240,000 MT for the week.
Exports, however, came in 31% lower than the 4-week average at 402,300 MT. This was a marketing year low.
Markets continue to focus on the ongoing trade spat between the United States and China. On Tuesday, the University of Illinois released a new study suggesting that U.S. soy cash prices will fall by as much as 10% should these tariffs suppress international demand for U.S. crops. As the university explains, about 59% of all Illinois soybeans have gone to China in the last five years. In 2016/17, that figure hit 60%
“If China imposes a 25% tariff on their imports of U.S. soybeans, we estimate the 2018 soybean price will be sharply lower, moving down from $9.70 per bushel to $8.85 per bushel,” the study reads. “This impact would then settle at $9.00 per bushel in 2019 through 2021.”
With that in mind, the impact of rising soybean prices is having a negative impact on the Chinese livestock industry. According the China National Grain & Oil Information Centre, Chinese farmers have cut back on their purchases of soymeal. The increasing cost of the agricultural input has fueled a decline in margins for farmers.
It’s important to note that the tariffs have not been implemented yet, and there remains a lot of time for a deal to be completed. In addition, farmers should recognize that U.S. soybean exports could remain robust if the U.S. continues to fill the needs of a more diverse customer base.
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