November 6: Soybean Prices Bounce Ahead of November WASDE

November Soybean prices are back above $9.80, wheat prices find support above $4.30, but December corn still can’t crack $3.50. It’ll be a fun week of trading ahead of the release of the November WASDE report on Thursday.

Here’s your daily recap from the Chicago Board of Trade.

Soybean Prices Rebound Monday

November soybean prices pushed to $9.84 in Chicago as markets prepare for Thursday’s WASDE report. The contract added 7 cents on the day. Soybean prices for the January contract added 7.25 cents to close the day at $9.94.

What prompted the uptick in soybean prices?

More analysts are projecting that the USDA will slash its average yield figure when it releases the November WASDE report on Thursday. Consensus yield expectations call for 49.3 bushels per acre.

That figure would be a slight downturn from the 49.5 bushels per acre reported in October. The number would also reduce the total number of bushels from 4.414 billion to 4.34 billion.

They also anticipate that U.S. stocks will fall from 430 million bushels to 425 million. Any larger downturn could be a boon for soybean prices.

The uptick came despite a weaker than expected exports total. The USDA reported shipments of 2.49 million metric tonnes for the week ending November 2. That figure is off about 7% from last year. Total exports year-to-date are now about 53.7 million bushels off from last year.

At 4 p.m. EST, the USDA reported its weekly Crop Progress Report.

Analysts had expected that the harvest would be at least 90% complete, and they were right on the nose. The figure is just one percentage point behind the five-year average.

December Corn Prices Can’t Top $3.50

Cash corn prices fell another 2.25 cents to close a tick above $3.30.

December corn contracts in Chicago were off 0.25 cents. Contracts ended the day at $3.48. Traders appear they are anticipating that the USDA will hike average corn yields from the 171.8 bushels per acre listed in October.

Trade estimates call for an average yield of 172.4 bushels per acre. That figure would boost total 2017 production from 13.327 billion bushels to 14.28 billion bushels. [1]

Analysts also project a small uptick in annual corn stocks.

The downturn came despite news that hedge funds have hiked their net long above 200,000 contracts. Waster Street Solutions said this morning that funds are hoping for a string of short-term bounces. However, it will likely require delays to crop progress in South America.

Markets also ignored the third consecutive day of large export sales announcements. Today, we saw an order for 5.1 million bushels labeled for unknown destinations for the 2017/18 calendar.

Meanwhile, the USDA released its weekly report on crop progress and quality.

Analysts had expected the U.S. corn harvest to be 69% complete.

Farmers delivered a higher figure. The USDA reported that the harvest is 70% complete. The figure is still well behind the five-year average of 83%.

Farmers in Iowa saw significant progress going from 44% complete to 67% in a week.

Wheat Prices Get Bounce Despite Shorts

Optimism is higher ahead of the WASDE report. Markets anticipate that U.S. inventory levels will decline by about four million bushels from the 960 million reported last month.

That’s why we saw an uptick in prices despite weak export numbers. Last week, exports totaled a little less than 285,000 metric tonnes. That figure was about 45% lower than the same period last year. It was also nearly 11% off from the previous week.

Markets also seemed to ignore the news that managed money is taking a bearish position on wheat. According to the Commitment of Traders report from last Friday, funds hiked their short position on wheat by nearly 27,000 contracts last week in Chicago.

Traders added another 10,500 to their short position in Kansas City for the week ending October 31. At a total net short of 21,393, traders have the largest short position on the market in about 14 months. [2]

The December SRW contract added 5 cents to close the day a tick below $4.31. The March contract added 3.75 cents to close the day just above $4.48.

The HRW contract in Kansas City added 3.25 cents to close the day at $4.30 per bushel. The March contract added 2.5 cents and closed at $4.47.

The MGEX spring wheat contract added 6.25 cents to close the day at $6.31. The March 2018 contract for the crop added 5.5 cents and closed at $6.44.

Finally, the USDA reported that 91% of the winter wheat crop had been planted. That figure is in line with the five-year average.

The more important number, of course, is the crop quality. The USDA reported that 55% of the winter wheat crop is rated good-to-excellent. That figure is three percentage points better than what the agency reported last week.

However, the number does trail the five-year average of 58%.

The most noticeable problems for the crop are happening in South Dakota. Just 19% of the winter wheat crop is rated G-E. By comparison, 43% of the crop is rated “very poor” or “poor.”

On Tap for Tuesday

Tomorrow, we’re going to dive into the factors impacting the North American barley markets. We’ll also start to offer our expectations ahead of Thursday’s WASDE report.

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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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