March 14: Soybeans Slump on Acreage News

Up in Ottawa, we’re facing sideways snow and warnings of colder temperatures.

But in Chicago, grain selling heated up as soybean prices dropped by more than double digits. Corn prices followed soybean prices lower, while wheat saw some gains in Kansas City and Chicago.

Here’s our daily recap of grain prices at the Chicago Board of Trade.

Soybean Prices Go in Reverse 

May soybean prices slumped 16.5 cents to close the day a tick above $10.32. The July contract shed another 16.5 cents and closed the day at $10.43 per bushel.

What fueled the selloff?

Two major factors are working against prices right now.

The first is that the Allendale survey revealed a strong uptick in acreage for 2018/19.

Soybean acreage is pegged to come in at 92.104 million acres.

That’s a 2 million acre jump from the previous year and well ahead of what the USDA had projected.

That number tops the latest U.S. Department of Agriculture (USDA) forecast for 90.0 million acres. It’s also well above the 90.142 million acres planted in 2017.

In addition, analysts are predicting that the crush report tomorrow will set a February record. The average projection sits at 149.443 billion bushels of soybean crushed for February. That figure would represent a 4.7% jump from February 2017.

As I noted today in GrainCents, Brazilian farmers have been hoarding their beans anticipating a trade war between the United States and China. Brazilians are hoping for a nice premium should China choose to restrict American soybeans.

Of course, it’s likely that U.S. farmers will be able to find new markets for their crop, assuming that the Soybean Export Council does its job. The media is spinning this story out of control. We are seeing claims that “China is snubbing U.S. soybean sellers” but then failing to provide clear data to back up the claim.

Wheat Prices Find Gains 

Winter wheat prices ticked higher on Wednesday.

May SRW contracts in Chicago added 2.25 cents to close just under $4.96. The July contract added 1.75 cents to close just above $5.06 per bushel.

In Kansas City, May contracts added 4.5 cents to close just under $5.25. The July contract gained 4.5 cents and finished just under $5.42 per bushel.

In Minnesota, spring wheat prices dipped 3.75 cents to close the day under $6.22 per bushel. The July price also declined by 3.5 cents to end the day just above $6.28.

Today, Allendale projected that total U.S. wheat plantings would come in at 46.889 million acres. That number is slightly above the 46.5 million acres projected by the USDA. It also tops the 46.012 million acres planted last year.

Breaking down that number, the survey showed total U.S. winter wheat acres at 32.554 million. That figure is off 152,000 acres from 2017. The survey shows that spring wheat acreage will come in at 11.924 million, up 915,000 from 2017.

The USDA projects total durum acreage at 2.421 million. That figure is up 114,000 from 2017.

Corn Prices Slide on Ethanol Report

Corn prices followed soybean prices lower on news that ethanol stocks hit a new record of 24.281 million barrels last week. The Energy Information Administration announced a stunning 1.137-million-barrel increase last week thanks to big gains in the Midwest and Gulf Coast.

Today daily production did decline by 32,000 barrels per day. However, the sharp uptick in inventories has come at a time that concerns are accelerating over demand. The Trump administration appears to be backing the latest proposal to reform the Renewable Fuel Standard.

Though the new reform would increase the window for sales, it might stifle demand by capping the RIN price.

We tackled this issue today in GrainCents, and have shown that the possible drag on corn prices could be significant.

Sign up for a free trial, and find out more.

Finally, an Allendale survey revealed a somewhat surprising acreage number for corn in 2018. The survey projected a 1.6-million-acre decline from last year to 88.514 million acres.

That figure is less than the 90.0 million acres forecasted by the USDA. It’s also about 1.5 million acres lower than the 90.167 million acres planted in 2017.

Oat Prices Dip Despite Carryout Cuts

Oat prices also had a tough day in Chicago. The May oat contract fell 7.5 cents to close the day just under $2.56. The July contract shed 6.75 cents to finish just above $2.59 per bushel. The downturn came despite the recent tightening of stocks by the USDA. The March carryout estimate of 20 million bushels is the smallest stocks figure since 1975/76.,

It’s also about 55% lower than the five-year average, and 65% lower than the 10-year average.

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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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