A busy day had members of the FarmLead team traveling in different directions across North America. Of course, our travels had to complement a busy day in the grain markets. As I’m pulling back into Chicago as today’s trading session ends, it’s important to digest what happened today for soybean prices and other commodities in the markets. Let’s dive into events that we monitored at the Chicago Board of Trade.
Technical Sales Fuel Decline in Soybean Prices
Soybean futures fell to their lowest level since early February as a number of different factors triangulated on the sector. Technical selling accelerated thanks to rising expectations for the size of the U.S. soybean crop and news of rain across Argentina.
Rain across Argentina led traders to take profits off the table after several months of dryness and continued cuts in production estimates. It’s clear that many people are discounting the likelihood that the USDA will increase cuts to its forecast.
The downturn came at a time that speculators are sitting on the largest net long position since June 2016. Friday’s Commitment of Traders indicated that hedge funds are holding a net-long position of more than 208,000 contracts.
May soybean prices plunged 27 cents to finish the afternoon at $10.225. July soybean prices slumped 26.75 cents to close the day at $10.335.
Today, the USDA reported that export inspections totaled a little more than 490,500 MT. That was a sharp decline (about 47%) from last week’s total. It was also down 30% from the same period in 2016/17.
Wheat Prices Also Experience Technical Selloff
In Chicago, SRW wheat contracts for May contracts fell 17 cents to fall below $4.51 per bushel.
July HRW prices fell 17.25 cents to close below $4.68 per bushel.
In Kansas City, HRW wheat contracts for May plunged 29.25 cents to close above $4.70. July HRW prices fell 28.5 cents to finish at $4.88 per bushel.
Spring wheat prices also experienced a sharp selloff thanks to the technical selling across the industry. The MGEX spring wheat contract for May closed under $6.00 after falling 14.25 cents. July spring wheat contracts dipped 12.5 cents to close the day at $6.06 per bushel.
The sharp downturn came thanks to a combination of technical selling, focus on European wheat quality, and an uptick in rains across the U.S. Plains.
The European Commission’s crop monitor MARS projected an uptick in soft wheat yields in 2018. The agency projected a 1.4% increase from the previous year and said that average yields could come in around 92 bushels per acre.
We saw about two inches of rain across central Kansas, but it’s unclear how much an impact the weather will have on the quality of the U.S. crop heading out of dormancy.
Markets were also watching export numbers from the USDA. The agency said that total wheat inspections came in at a little more than 443,000 MT. That figure is off about 32% from the same time last year.
Corn Prices Follow Other Commodity Prices Lower
May corn prices closed the day off 7.75 cents to finish at $3.75 per bushel.
July corn prices closed the day down 7.75 to finish a tick above $3.83 per bushel.
Today, the USDA issued a weekly update on export inspections. The agency said inspections came in at 1.409 MMT for the week ending March 15. That figure was slightly above the export numbers from the previous week and the same period last year.
The USDA also reported two large export sales. The first is set for 115,000 MT to unknown destinations during the current marketing year. The agency also said that Japan has purchased 206,000 MT for the 2018/19 marketing year.
We’re paying close attention to how funds will be operating this week. The Commitment of Traders report on Friday indicated that hedge funds are sitting on their most bullish position in 20 months.
Speculators are sitting on a net long position of 233,063 contracts.
Sign Up for the Breakfast Brief
Looking for daily content on the U.S. and Canadian grain markets?
Be sure to sign up the daily Breakfast Brief. Each morning, FarmLead co-founder and CEO Brennan Turner takes you insight the numbers to break down what is moving grain prices across the continent.
We’re not just talking exchanges in Chicago and Winnipeg.
We’re talking about local prices on some commodities with limited price transparency.
It’s free and delivered to your inbox every morning.