December 18: Soybean Prices Slide as Rains Enter Forecast in South America

Good afternoon everyone from Chicago. We’ll get started with soybean prices, which fell Monday thanks to expected rains in South America.

And if you don’t like talking about the weather, there’s some bad news. We’ve got to talk about drought conditions and the impact on the already 100-year low in wheat acreage in the United States. Let’s break it all down in your daily recap of grain prices from the Chicago Board of Trade.

Soybean Prices Slip

Despite some bullish export numbers from the USDA, today’s soybean trade was dominated by headlines out of Argentina. The January contract fell to a three-month low of $9.615 per bushel. The March 2018 contract shed 5.5 cents and closed at $9.725.

We can blame Argentina, where an uptick in rain is boosting the expected size of its soy crop. The forecasts indicate that the warm and dry weather in the region will give way to a much-needed drink.

The expected rise in Argentine production offset optimism around the export numbers for the week ending Dec. 14. Last week, the U.S. shipped 65.2 million bushels, well above trade expectations and a little less than 50% higher than the previous week’s shipments.

In neighboring Brazil, SAFRAs slashed its 2017/2018 production forecast. The consulting firm anticipates production of 4.2097 billion bushels. That’s a small decline from its October estimate.

Despite about a 5% uptick in acreage, dry weather conditions continue to be a drag on production.

Wheat Prices Find Gains

In Chicago, SRW wheat contracts added 2.25 cents in the March contract. The May 2018 contract added 2.75 cents to close at $4.335.

In Kansas City, March HRW contracts added 1.75 cents to close the day a tick above $4.19. The May contract added 1.5 cents to finish the day just under $4.32 per bushel.

The wheat complex’s only losses today could be found up in Minneapolis. The May spring wheat contract fell 0.75 cents to close a tick above $6.19 per bushel. The May contract shed a penny and closed just above $6.27.

The gains came after weekly export numbers came in higher than traaders expected. The U.S. shipped 21.5 million bushels last week, a figure that was more than 50% higher than exports from the previous week. The figure also topped the highest range of trade expectations (at 16.5 million).

The uptick came despite the ongoing surge in global supplies both in the near-term and beyond the next decade. As we’ve noted many times in recent weeks, Russia’s production and export figures are at record levels. Russian exporters are set to ship roughly 1.47 billion bushels of wheat in the 2017/18 marketing year.

So, what should competitors do?

In the U.S., farmers have cut wheat acreage to 100-year lows. But the European Union isn’t taking that approach.

The European Commission projected that farmers in the region will increase wheat soyings through 2030, a decision that questions the total impact of Russian competition. The EC said farmers will choose wheat acres while cutting back on rapeseed production in a new report.

The EC said that soft wheat planting will increase from 23.6 million hectares to 24.8 million hectares by 2030. [1]

Corn Prices Remain “Boring”

Today’s trading didn’t see a lot of action in the corn complex.

The March and May 2018 contracts shed 0.5 cents to close the day at $3.47 and $3.5525, respectively.

With harvest at an end, the big concern is oversupply. We’re seeing lower basis prices across the Midwest, and a lot of weaker numbers out of elevators and ethanol plants. This is one more reason why you should post your grain on FarmLead’s marketplace and get your grain tested. When you know all the specifications, you can shift negotiation power into your favor. Visit www.graintests.com.

Export numbers did fall short for the week ending Dec. 14. The U.S. shipped 23.4 million bushels, missing the low end of trade expectations by about 200,000 bushels.

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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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