October 10 – Spring Wheat Prices Retreat

A day after trading was closed for the Columbus Day weekend, grain prices fell across the board on Tuesday at the Chicago Board of Trade. December corn contracts fell back below $3.50, while spring wheat prices declined by 5.75 cents.  Weather events continue to delay that harvest. Meanwhile, managed money has turned bearish again across the agricultural complex. [1]

Markets didn’t show significant price movement as traders continue to take a wait-and-see approach to Thursday’s World Agricultural Supply and Demand Estimates (WASDE) report. Wheat prices saw the biggest movement on the day.

Here is our breakdown of today’s trading at the Chicago Board of Trade.

Corn Prices Dip

Corn prices fell again in Chicago. The December contract fell 0.25 cents to close at $3.4925. The March contract was unchanged at $3.6275. Weak export numbers weighed on sentiment, but we weren’t expecting a lot of activity ahead of Thursday’s report.

The USDA released its weekly crop quality and progress report. The harvest from the top 18 corn producing states is 22% complete. This is well behind last year’s 33% reading and the five-year average of 37%. It is also well below trade expectations of 25% to 30%.

As we noted last week, farmers have been hard at work cutting soybeans across the country while corn maturity remains a concern. Just 82% of the crop is mature, well behind last year’s reading of 92% for the same time of year.

Last week, corn rated good-to-excellent came in at 64%. That figure represented a one percentage point decline from the previous week.

Today’s surprise came from Brazil. According to CONAB, the nation’s first crop may be the lowest on record. The agency projected total acreage 12.18 million to 12.716 million. That is a big decline from last year.

Meanwhile, they said that corn production could fall by as much as 5.75% to hit a range of 92.19 million to 93.6 million metric tonnes.

We can blame low corn prices, bad weather, and increased soy production for this trend.

“The highly favorable climate conditions that contributed to a record grain output last season are unlikely to be repeated,” the agency wrote in a statement.

While the smaller Brazilian crop might bave generated some buzz, we did see an uptick in French production estimates. The country hiked its production expectations to 511.8 million bushels. That was about a 10-million bushel uptick from previous forecasts.

Soybeans Slide Again

November soybean contracts dropped 0.75 cents on Tuesday and closed at $9.66. The January contracts shed a penny and finished at $9.7625. The downturn came despite concerns of frost hitting the northern plains.

The USDA reported that the soybean harvest is 36% complete. That figure is 7 percentage point behind the five-year average of 43%. Meanwhile, the agency increased the number for soybeans rated “good-to-excellent.” The agency increased the figure by one percentage point to 61%.

The agency also reported a big sale of soybeans to China. An export deal of 131,000 metric tonnes came through the daily reporting system.

But our attention was again on soybean production in Brazil.

CONAB said today that total acreage of the Brazilian soybean crop is expected to increase by 1.64% to 3.83%. That would put total acreage at around 85.17 million to 87 million, according to CONAB. [2]

Despite the uptick in acreage, CONAB said that a decline in yield would bring total production down to a range of 106 million to 108.257 million metric tonnes.

Spring Wheat Prices Retreats on Tuesday

This morning, the USDA offered updates on weekly inspections. The report indicated that 12.883 million metric tonnes were exported. That figure is about 20% lower than the same period in 2016.

December SRW wheat prices fell 0.75 cents to close the day at $4.3525. The March contract fell 0.75 cents and closed the day at $4.5525.

In Kansas City, the December HRW contract did show gains. The December contract finished up 0.5 cents and closed just above $4.31. The March contract also added 0.5 cents and finished a tick above $4.49.

Finally, spring wheat contracts were off on the day. The December MGX contract shed 5.75 cents and closed the day at $6.175. The March contract also shed 5.75 cents and closed at $6.315.

In tender news, GASC has purchased another 170,000 metric tonnes of wheat from Russia. The deal is set for November delivery.

Meanwhile, Japan has announced that it wants 106,045 MT of wheat from Australia, Canada, and the United States. The tender, which includes 34,175 metric tonnes of U.S. wheat, will close on Thursday, the same day of the USDA October WASDE report.

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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