May 16: Soybean Prices Drop as Argentina Currency Woes Continue

Soybean prices continued to slump due to ongoing weakness in Argentina’s currency. A late surge in wheat buying on Wednesday afternoon helped keep the entire grain complex from finishing in the red. With the U.S. dollar trading at 2018 highs, grain prices have faced increased pressure.

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

Soybean Prices Crater in Chicago 

It was another brutal day for soybean prices at the Chicago Board of Trade.

The July soybean contract slumped 19 cents and closed under $10.00 per bushel.

The August contract shed 18.75 cents to end the day just above $10.03.

Blame China. Blame Argentina. Blame U.S. farmers.

Markets are increasingly worried about demand in China at a time that the U.S. is trying to fix trade relations with the nation. Markets also continue to monitor a weaker Argentine Peso, which is making the nation’s exports more attractive. Finally, we’re still reacting to news that Informa increased its planting estimate to 89.4 million acres. That figure is 400,000 acres higher than USDA estimates.

That is a lot of bearish news for U.S. soybeans.

As Brennan noted in the Breakfast Brief, we saw a record soybean crush for the month of April. The National Oilseed Processors Association said the crush came in 161 million bushels in April. This figure suggests that the recent WASDE forecast might be 15 to 20 million bushels too low for the 2017/18 crush number.

Corn Prices Slide on Wednesday

July corn contracts fell 3 cents and ended the day under $4.00.

Today, the Energy Information Administration announced an uptick in production in U.S. ethanol for the week ending May 11. The agency said that the U.S. produced 1.06 million barrels of ethanol each day for the week, an average increase of 18,000 barrels per day from the previous week. Ethanol stocks declined by 459,000 barrels to hit 21.51 million barrels.

During a light day of data, markets are more concerned about tomorrow’s exports figure. Traders expect that we’ll see more than the 30.9 million bushels reported for sales last week. Given expectations that Brazil’s corn crop is under stress, we can expect some better numbers for corn exports in the weeks ahead. 

Wheat Prices Find Gains

In Chicago, July SRW prices added 0.75 cents to close the day above $4.94 per bushel. The September contract added 0.5 cents to end the day a tick above $5.10.

In Kansas City, the July HRW contract added 4.25 cents to close at $5.14 per bushel. The September contract added 4 cents closed the day at $5.325.

In Minneapolis, spring wheat contracts for July added 5 cents and ended the day above $6.11. The September 2018 MGEX contract added 4.5 cents just under $6.18 per bushel. The uptick came as traders eyed the latest round of weather reports. Rain across the Northern Plains are expected to fuel additional delays to the seeding of spring wheat.

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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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