December 28: Soybean Prices Fall Roughly 1 Percent in Chicago

The December slump continued for soybean prices.

However, too many people were digging out their cars from the wet stuff to notice.

What better way to get away from bone-chilling negative temperatures than to fill your streets with snow and ice?

That’s Chicago.

With Lake Michigan reportedly frozen over with pancake ice, we remember at the Chicago Board of Trade why Futures trading exists in the first place.

Of course, the big chill today wasn’t outside in the streets, but insight the Chicago Board of Trade, where soybean prices cratered. The downturn also pulled down canola prices up in Winnipeg.

On a slow day for corn and wheat trading, perhaps it really is better to think about baseball. We’re only three months from Opening Day. Here’s your daily recap of grain prices from the Chicago Board of Trade.

January Soybean Prices Fall 9.75 Cents

This month hasn’t been very good to farmers and soybean prices.

The cherry on top of the miserable sundae came Thursday when January contracts shed another 9.75 cents to close a tick under $9.46 per bushel.

The March 2018 contract fared even worse. A 10.75-cent decline brought it to $9.5675.

The chatter centered on profit-taking ahead of the new year. At least that’s what everyone says when they don’t look too deeply into the numbers. Prior to the Christmas holiday, the January contract had been in freefall. Before topping out ahead of the December WASDE report, the contract has plunged from above $10.10 per bushel on December 6 all the way down to under $9.47 per bushel last Friday.

So, the little pop that pushed soybean prices to above $9.63 on Tuesday created conditions for another round of sales. With that in mind, we’re now sitting at contract lows not seen since early September.

The selloff came a day before the USDA will report weekly export numbers. Markets expect that the soybean shipment total will come in between 850,000 metric tonnes and 1.5 million metric tonnes.

There are two other stories of note today. I know that these aren’t really things that capture much headlines, but they’re really important to grain prices around the globe. When these things happen, we see traders make decisions around the globe, and that impacts the bottom line of the farm.

Sometimes these reactions are rational and sometimes they are not. But we are always at the mercy of these decisions.

The first is happening in Argentina.

While the weather down there has been a big source of frustration for farmers here (the dryness is giving way to rain, which is improving their crop size and quality, and thus impacting international prices), there’s a major strike happening in the country that is affecting their largest grain ports.

Rosario’s ports are paralyzed. Now, you might not have heard of this city, but think of it as Chicago, their central hub for grain decisions. It is centrally located between Mendoza and Buenos Aires.

Roughly 80% of the nation’s exports go through this city and its waterways.

Now, Argentina has a basket case economy. Some reports indicated that inflation is north of 20%. Typically, strikes are caused by wages and woes about the falling Peso. But this strike is all about work safety. Yesterday, an explosion in a shipping terminal killed one worker.

Strikers are now protesting for the next 48 hours. For a nation that already has enough supply chain problems, just two days of stoppage has the potential to cause a significant number of headaches.

The second story is about China.

Last week, I discussed a new bearish factor in GrainCents, our daily subscription services that keeps farmers up to date on price movements and gives them insight on how and when to sell and manage their grain.

Learn more about it, right here.

The topic centered on a demand by the Chinese government. China has demand that all cargoes of soybeans be subject to higher standards surrounding foreign material. Shipments with impurity levels below a new 1% standard will receive priority for shipment.

Those that don’t meet the standard… well, they’ll be required to do some cleaning.

Now, this doesn’t affect Brazil or other competitors. It’s a USDA standard that is going to affect producers and everyone else in the supply chain selling to China.

This is going to cost some business. More important, it’s also going to cost more money for everyone involved. According to a report today, more than half of the shipments to China in 2017 had Foreign Material impurities above 1%.

Yes, this is going to be a problem.

I’m going to discuss this much more next week when we talk about where soybean prices and exports will be heading in the year ahead. 

Corn Prices Edge Lower 

This was a pretty boring day for corn traders. The March 2018 contract shed 1.75 cents to close at $3.52. The May 2018 contract dipped 2 cents to close just above $3.60 per bushel.

Seriously, there are more important things to talk about than ethanol reports and Gulf shipments.

I’ll dig deeper this weekend into the greater story about corn in 2017. In addition, I’ll really carve up that export report set for tomorrow morning.

Trade expectations call for the number to fall into a range between 600,000 metric tonnes and 1.1 million metric tonnes. 

Wheat Prices Mixed Across U.S.  

It was a mixed day for wheat prices across the country.

March SRW contracts fell 0.25 cents to close a tick below $4.28 per bushel. The May 2018 contract dipped 0.5 cents to finish just under $4.41.

Down in Kansas City, wheat prices showed some additional gains. Traders are keeping a close eye on reports of sub-zero temperatures across Kansas and other key producing states. With wheat acreage at the lowest level in more than 100 years, we’re starting to see some rumblings about supply concerns if the winter crop is hit by frigid temperatures.

Finally, spring wheat prices for March fell 2.25 cents and closed the day at $6.19 per bushel. The May 2018 contract is now just below $6.27 per bushel. Looking into January trading, the question now is how much of a spread we’re going to see between the MGEX prices and prices in Chicago and Kansas City. Tight acreage numbers could create anxieties over the ability to obtain higher-protein content. USW’s Stephanie Bryant-Erdmann suggested that premiums are going to increase.

Looking Ahead This Weekend 

Over the weekend, we’re going to look back at 2017 and dig into the major trends that led grain prices to their closing prices on Dec. 29. By looking back, we’ll be better able to forecast where selling opportunities will emerge for farmers in the year ahead. Enjoy your Thursday evening.

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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