September 14 – Soybeans Surge as CPI Monthly Update is Released

November contracts for soybeans rallied by double digits in a busy  day of trading at the Chicago Board of Trade. Today, the U.S. dollar was back in focus with the monthly update on the consumer price index (CPI). With the dollar off more than 11% in 2017, some economists are losing patience with the Federal Reserve.

The dollar has steadily declined on expectations that the Fed will not move on interest rates until later this year and fleeting expectations for tax reform and other pro-growth policies from Congress and the Trump administration.

Today, the U.S. Labor Department reported the largest increase in the CPI in four months. A jump in fuel prices – primarily caused by rising gasoline prices in the wake of two hurricanes – were blamed. The CPI report will likely be viewed as a short-term blip on the radar. Though the Federal Reserve meets next week on monetary policy, we’re likely not going to entertain a discussion about interest rates again until December.

Here’s more on what happened today in U.S. markets and how grains performed at the Chicago Board of Trade Thursday.

Corn Prices Show Modest Gains

Corn contracts were moving higher Thursday in Chicago. The November corn contract added 2.75 cents to close the day a tick above $3.54. The March contract also added 2.75 cents to finish at $3.665.

This morning, the USDA reported a larger than expected export figure for the first week of the 2017/18 marketing year. The agency reported export sales of 1.047 million metric tonnes. Despite all the hoopla about the future of the North American Free Trade Agreement, it looks like Mexico isn’t going to be hostile to U.S. production. The U.S. trading partner bought 433,000 metric tonnes, or more than 40% of the total.

On the global front, we’re still paying close attention to the production figures out of Argentina.

Today, the Rosario Grain Exchange altered its expectations for corn production in Argentina by 7.8%. In increased its target by 3 million metric tonnes to 41 MMT.

Yesterday, we noted that China had become the third nation to adopt an ethanol mandate. As I noted, the country is awash in out of date corn supply, so burning it makes a lot of sense. For further evidence of their abundant supply, the nation just sold 725,665 metric tonnes of its 1.21 million metric tonnes of its 2013/14 auction of state reserves.

Soybeans Rally Double Digits

Soybean prices were on a tear this afternoon. The November contract added 15.5 cents to finished at $9.76. Meanwhile, the January contract gained 15.25 cents to finish at $9.86.

The big uptick comes two days after the USDA’s WASDE report upwardly revised yield expectations by a half bushel. As our Doug Kirk noted earlier this week, the USDA made its decision based on pod weights, which would have to be the highest level ever.

That said, markets are still trying to determine how much of an impact Hurricanes Harvey and Irma have played on crops in the Southeast. We’ll likely know more when the NASS reports on crop progress and conditions on Monday.

Today featured a lot of chatter about the export numbers. For the first week of the marketing calendar, the report indicated sales of 1.612 million metric tonnes. China was the overwhelming largest customer, snapping up 1.212 million metric tonnes for the week.

Tomorrow, we’re going to be keeping an eye on the NOPA report for August. A survey of NOPA member revealed that they expected the total crush figure to come in around 137.5 million bushels.

Spring Wheat Prices Crater

The Chicago SRW contract for December shed 0.25 to finish at $4.43.

The Kansas City HRW contract dropped 2.25 cents to close the day at $4.42. The March HRW contract shed 2.5 cents to close a notch above $4.59.

In Minneapolis, spring wheat contracts fared far worse. The December contract shed 11 cents to close the day at $6.325. The March contract was off 10 cents, finishing just a tick above $6.45.

The USDA reported weaker than expected export figures for the week ending Sept. 7. The agency reported just 316,684 metric tonnes for the 2017/18 calendar. The country is more than 21% behind last year’s figure.

On the global front, there’s some divide between expected wheat production in the European Union. This week, the USDA projected 148.87 million metric tonnes. But Strategie Grains expects that figure to be a bit smaller. The firm projected total EU output to round out around 142.5 million metric tonnes.

Riding Out Low Prices

I want to highlight a really interesting piece from Nat Williams at Iowa Farmer Today. The author highlights a building trend across the country, one that was evident at the Farm Progress Show last month. [1]

Farmers are waiting out low prices and have put capital upgrades on hold. Williams highlights the challenges faced by Illinois farmer Duane Dahlman, who said that the lack of income he’s facing is making it harder to make upgrades to his land.

“The acreage I own is going to stay the same,” he said. “I’ve actually lost several parcels of rental land over the last several years. That’s had a definite effect on me. Given my age and where things are at, retirement or semi-retirement is definitely coming into the conversation a lot more.”

At a time that farmers are facing increasing price pressures, it’s absolutely critical that they do all they can to get the best price possible.

This is why FarmLead exists. Our commitment to farmers is to provide them with the tools they need to get more money for their grain. Part of the mission is to bring sellers power in an industry that has overwhelmingly favored buyers for a century.

One of the best parts of FarmLead is the price. It is 100% free to post your grains and negotiate a deal with buyers across North America. Once a deal is struck, you pay significantly less than anything you would pay to a broker.

We succeed when you succeed and get the best price available.

Learn more about the FarmLead marketplace here.

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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