September 18 – USDA Reports Dip in Soybean Quality

Monday was a lackluster day of trading here in Chicago. All three major commodities traded in the red, with December SRW contracts showing the largest percentage losses.

Markets were largely keeping an eye on the weather in South American markets to get a better sense of production expectations. In Paris, wheat, corn, and rapeseed contracts slipped.

On Monday afternoon, the USDA released its latest crop quality and progress report. The figures offer an update on conditions for the week ending Sept. 17.

We break down those numbers and more in our daily report from the Chicago Board of Trade.

Corn Prices Dip Again

The December corn futures contract fell 3.25 cents Monday. ZCZ17 closed at $3.515.

The March 2018 corn futures contract was off 3.25 cents and closed at $3.64.

Data from the Commitment of Traders report show that the bears are leading the charge against corn prices.

On Friday, the Commitment of Traders report showed that the so-called smart money had added narly 9,700 contracts to their net short position. Last week, we saw a net position of -119,412 contracts.

Today, USDA export inspections figures were released for the week ending Sept. 14. All told, shipments fell by 47.8% compared to the same time last year. Total corn export came in at 676,819 metric tonnes.

Today’s crop progress report offered some insight into the state of the corn harvest. Markets expected that just 7% to 8% of the corn harvest would be complete.

The USDA reported 7% progress on the harvest. That figure is lower than last year’s 8% total, and well behind the five-year average of 11%.

Meanwhile, corn rated good-to-excellent last week came in at 61%. That figure is unchanged from the previous week. However, it is still well below last year’s figure of 74%.

Conditions fell over the last week in Colorado from 65% G-E to 58%, Pennsylvania (down from 91% to 87%), and Kentucky (83% to 81%)

Conditions improved in Illinois from 52% to 56%, Iowa (up from 59% to 60%), Nebraska (62% to 64%), and Minnesota (81% to 82%).

Conditions were unchanged in Texas, Wisconsin, and Indiana.

Soybean Prices Get Little Support

Soybean prices showed small loses on Monday. The November soybeans contract shed 1 cent and closed the day under $6.68. The January contract was off a penny and closed at $9.78.

The trading session had kicked off with an upward tick. It looked like soybeans might show their third daily gain out of the last four trading sessions.

Cash sales continued their uptick today as exporters along the gulf are filling September shipments. The USDA announced the sale of another 132,000 tonnes of American soybeans to China.

But prices still remained under pressure due to concerns about another record crop in the United States and uncertainty over just how much Argentina plans to cut production. Local economists in the region predicted that we’d say up to a 7% cut in production to 52 million tonnes, according to Reuters. The sentiment is fueled by price concerns in the region.

That said, we’re going to be taking a much deeper dive into Argentina’s soybean crop tomorrow at FarmLead Insights. Be sure to check back, as this will be an opportunity to view the deeper research we will be conducting for customers in the years ahead.

In other bullish news, Informa Economics projected a cut in soybean acreage for the 2018 schedule. In a note to clients, the company forecasted an uptick in corn and wheat acreage at the expense of soybeans.

Soybean meal contracts did show small gains. The October contract added a penny to close the day at $3.09. The December contract added 1.25 cents and finished a notch below $3.13.

The USDA reported that soybeans harvest last week came in at 4%. That’s the same percentage during the same period in 2016.

However, soybean quality saw a slight decline. Total soybeans rated G-E fell from 60% to 59%. Last year, soybeans rated G-E came in at 73% during the same time period.

Wheat Prices Can’t Hold Monday

In Chicago, SRW contracts for December fell by more than 1% on Monday. The December contract shed 5.5 cents to close at $4.435.

The March contract was off 4.25 cents to finish the day just under $4.64.

Down in Kansas City, HRW contracts didn’t fare any better. The December HRW contract was off 3.75 cents to finish the day a tick above $4.42. The March contract was off 4 cents and finished just under $4.60.

Finally, in Minneapolis, spring wheat contracts were showing slight gains. The December spring wheat contract added 0.75 cents to close the day above $6.22. The March contract added 1.25 cents and finished at $6.36.

Total we saw some reaction to lackluster wheat export figures. Total inspections for last week came in at 464,375 metric tonnes.

That’s 8.75% below the previous week’s totak and more than 19% off from the same period last year. As we’ll discuss on Thursday, Russia is dominating the global export market right now, and there’s little that can be done.

We saw some short covering due to concerns about Australia’s harvest. Unfavorable weather continues to drag down expectations for the nation’s crop.

As of Sept. 12, speculators reduced their net short contracts by 2,825. Total net short positions sat at -83,745 as of last Tuesday.

This afternoon, the USDA reported that the U.S. winter wheat planting figure sits at 13%. That number trails last year’s figure and the five-year average (both 15%).

Traders expected anywhere between 15% and 17%. The USDA reported just 13% of the crop has been harvested.

 

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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