Grain prices, especially soybean prices, took a backseat to critical news out of Washington D.C. Thursday.
The Dow Jones is at a new all-time high after Congress unveiled the largest tax reform plan since the 1980s. The plan would slash the U.S. corporate rate from 35% to 20% in an effort to bolster economic growth and wages across the country. The Dow fell about 100 points before this morning’s announcement. Grain prices received a bit of support from the announcement after the U.S. dollar weakened on the news. The tax plan will likely to expand U.S. deficits.
Here’s our daily recap of trading from the Chicago Board of Trade.
Corn Prices Tick Up After Huge Mexico Sale
Traders came into Thursday’s trading session looking for a bargain. Buying pushed the December contract up 2.25 cents to close the price at $3.505. As we noted in the October recap of grain prices, the December contract has hovered in that $3.50 range for a month.
Prices pushed higher after the USDA announced a private sale of corn crop to Mexico.
And boy was it… Yyyuge!
The order, which has delivery dates for both the 2017/18 and 2018/19 calendar totals 53.4 million bushels.
But it wasn’t all rainbows and sunshine in Chicago, where gray weather continues to blanket the sky. Export numbers for the week ending Oct. 26 came in smaller than trade expectations. The USDA reported a combination of old- and new-crop orders of 31.9 million bushels.
Analysts expected 37.4 million bushels.
The other bearish factor was coming from analysts ahead of next week’s WASDE report.
As Brennan noted in the Breakfast Brief this morning, INTL FCStone hiked its projection for November corn yields above last month’s WASDE estimate. Now, we can add Informa Economics to the bearish sentiment. Analysts in Memphis project that corn yields will come in at 173.4 bushels per acre. That’s a big jump from their previous estimate of 170.5 bpa.
Start your November grain marketing with a look back at grain prices in October.
November Soybean Prices Approach $10 Per Bushel
Buyers bumped the November soybean prices up to nearly $10.00 Thursday.
The front-month contract added 8 cents to close the day a tick above $9.99.
The January contract also added 8 cents and closed at $10.095.
What drove that bump?
Expectations for a smaller harvest and solid export numbers.
Today, Informa Economics announced that it projects a November WASDE yield of 49.7 bushels per acre. That figure is down from the 50.0 that its analysts projected last month. The number is also lower than the 49.9 bpa that the USDA reported in October.
By contrast, INTL FCStone analysts anticipate that we might see yields go right back to where the agency pegged them in September: 49.9 bpa.
The USDA reported that the Oct. 26 export figrues topped trade expectations of 60.6 million bushels. The agency reported 72.8 million total bushels in sales, although about 99% of the sales were old crop. Export figures are well above USDA expectations.
Wheat Prices Rebound On Tap?
Wheat prices rallied hard on Thursday thanks to a strong push from technical buyers.
The December SRW contract rallied nearly 2%, gaining 8 cents in Chicago. The front-month contract finished the day at $4.26 per bushel. Meanwhile, the March contract added 8.5 cents and closed the day at $4.445.
Down in Kansas City, the December HRW contract added 10 cents and closed the day at $4.4575. The March contract added 10 cents and closed at $4.435.
Up in Minneapolis, the spring wheat contract for December added 8.75 cents to close the day a tick below $6.23. The March contract added 8.75 cents to close at $6.365.
On the export front, traders seemed content with the Oct. 26 weekly report. Total U.S. exports totaled 12.8 million bushels. That figure was about 100,000 bushels below trade expectations.
We’ve been keeping a close eye on Egyptian wheat buying in recent days. According to Farm Futures, Egypt purchased nearly 135 million bushels of wheat between July and mid-October.
Roughly 75% of that wheat has come from Russian sources. As we explained earlier this week, Egypt is the largest importer of wheat in the world. They play a very critical role in the global market in that they have effectively turned away from North American wheat due to higher prices and higher grain standards.
On Tap Friday
Tomorrow, be sure to check back tomorrow for our insight on a critical grain factor impacting soybean prices this month. In addition, read the Breakfast Brief for more updates on why wheat prices were on the move today.