Argentina fueled a pop in soybean prices once again with its weather forecast. Despite expectations last week that the parched land would see a drink, those forecasts were premature.
Dry weather over the next 10 days is giving traders optimism ahead of the February WASDE report this week.
Here’s what else you need to know from the Chicago Board of Trade.
Why Soybean Prices Surged Today
Cash soybean prices fell 8 cents on the day to $9.36 per bushel.
But the bigger news was the near 2% surge in prices at the Chicago Board of Trade.
The March 2018 futures contract added 16.5 cents to close the day above $9.86 per bushel. The May contract also added 16.5 cents and closed just under $9.98.
The uptick came thanks to a dry 10-day forecast. Rains are well below normal in a key producing region called Pampas and are expected to remain that way through February 16.
As we’ve noted, the USDA’s attaché has yet to adjust its production estimates for Argentina.
The markets certainly expect it later this week in the monthly WASDE report.
The big question mark, however, is whether the USDA will upwardly review Brazil’s production figure and offset any expected decline from Argentina. Average analyst expectation heading into the report is an uptick in Brazil’s production by 1.5 MMT to a whopping 111.5 MMT.
They call for a 2.2 MMT cut in Argentine production to 53.8 MMT.
If the USDA comes in at that level, it will be higher than some of the estimates in the 51.5 MMT to 52.5 MMT range that we’ve seen over the last week.
We’re going to be watching to see if we get a little additional exuberance in the next few days.
Here’s Why Corn Prices Tilted Higher
Down in Chicago, March corn prices added 4.75 cents to close the day at $3.635 per bushel. The May contract added 4.5 cents and closed a tick above $3.71. Here’s what happened…
The gains today were largely the result of weather events down in Argentina. Forecasts had called for rain just days ago, but it appears that the dry weather will persist for another 10 days.
That pop was also complemented by weaker Ukraine corn sales (which we covered today), and two big export sales reported by the USDA.
Today, we saw export sales of 120,000 MT to Japan and another 105,000 MT to unknown destinations.
It will be a busy week for data geeks.
Tomorrow, we’re looking at the EIA’s weekly ethanol report. It would take something significant though in that report to pump prices in either direction by a significant amount.
Instead, the focus is on Thursday’s WASDE report and what the USDA will do with its production figures in Brazil and Argentina…
We also want to see what is happening with global stocks.
Making “Cents” of Tuesday’s Wheat Prices
It was a solid day for wheat prices across the United States.
Chicago SRW contracts added 6 cents to close just above $4.46.
Kansas City HRW contracts gained 7.25 cents to finish at $4.69.
And Spring Wheat prices in Minneapolis gained 6.5 cents to close above $6.08.
Once again, the weather played a big role. Forecasts indicate over the next week that we’re going to see very little rain in Kansas, Texas, and Oklahoma.
The drought has pummeled the Midwest for several months, and there remain significant concerns about Winterkill and yields heading into late February.
Heading into Thursday’s WASDE report, analysts are expecting that stocks will decline to 267.8 MMT. That would be a cut of roughly 220,000 MT from last month’s report.
I dug deeper into global inventory levels today… and why we have to focus on Russia for any hope in falling inventories in the year ahead.
Aside from that update, we also saw big wheat tenders from Japan and Ethiopia.
The country is seeking 100,517 MT of high protein wheat from Australia, Canada, and the United States. As noted, one of these three countries might be falling off the list in the coming months… and that’s bad news for a lot of North American wheat farmers.
Ethiopia is seeking 400,000 MT of wheat for a tender that closes on February 13.
January’s Purdue/CME Group Ag Economy Barometer
Today, Purdue University and CME Group released their monthly Ag Economy Barometer report for January.
The team reported that sentiment increased in January by nine points.
The Ag Economy Barometer is measured through a survey of 400 producers to gauge their economic sentiment. The January reading was 135. Just 43% of respondents said their farmers are worse off from this time last year. Producers were largely mixed about the impact of the recent tax bill on their operations in 2018.
Now, I just want to say that 43% is a lot of farmers saying that they are struggling. That’s why I encourage farmers to use FarmLead’s marketplace to secure a higher price for their grain.
I’ve written a lot about the benefits.
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