April 16: Wheat Prices and Soybean Prices Slump in Chicago

Wet weather across the United States pushed grain prices lower. Rain across the U.S. plains are giving winter wheat acreage a needed drink, while technical selling fueled a slump in prices. Here in Chicago, a mid-April snow storm has traders punching orders with their gloves. However, the winter weather should finally leave the Midwest over the next 48 hours.

Here’s our recap of grain trading from the Chicago Board of Trade.

Wheat Prices Slump on Weather Forecasts

Wet weather across the southern Plains weighed on winter wheat prices in Chicago and Kansas City. Forecasts project that rain will continue across the region later this week, providing a much-needed drip for beaten down crops.

In Chicago, May SRW wheat prices slumped more than 2% on the day. The May contract shed 10.25 cents to close the day a tick above $4.62 per bushel. The July contract shed 10.25 cents to close the day at $4.79 per bushel.

Down in Kansas City, HRW contracts for May had a far worse day, plunging more than 3%. That contract shed 17.75 cents and closed the day at $4.78 per bushel. The July contract slumped under $5 per bushel after falling 18 cents to end the day at $4.97 per bushel.

The USDA’s weekly inspection figure came in about 12% higher than last week’s report. The agency said that wheat export shipments for the week of April 12 totaled 483,058 MT. That figure was still behind the same week in 2017 by roughly 29.5%.

The USDA reported that the quality of U.S. winter wheat is still bad compared to last year and the 5-year average. The agency said that winter wheat rated good-to-excellent in the top 18 producing states sat at just 31%. That figure lags last year’s G-E rating by 25 percentage points.

The chart below provides a breakdown of crop quality in the top 10 producing states in the U.S.

Up in Minneapolis, things we not too much better for spring wheat contracts. The May contract closed the day down 10.25 cents and ended just under $6.07 per bushel.

This afternoon, the USDA reported the progress of spring wheat planting across the top producer states. The USDA reported that spring wheat planting is just 3% complete. That figure lags last year’s planting progress by nine percentage points.

However, the figure is a full 12 percentage points behind the 15% that is the 5-year average.

Planting delays are noticeable on the chart due to the weather map across the United States. Snow cover continues to blanket the northern plains and is delaying planting in the Dakotas. In South Dakota, spring wheat planting is sitting at just 1%.

Last year, farmers had completed 48% of their planting during this period. This has drawn the attention of analysts who are starting to speculate that farmers in the region may turn to soybeans the later that these delays extend.

Soybean Prices Drop 1% on the Day

Soybean prices slumped despite a strong NOPA crush report for March. Chatter about spring wheat switching across the United States and speculation about an even bigger record Brazilian crop was weighing on trader sentiment.

The May soybean contract in Chicago shed 12.25 cents to close the day at $10.42 per bushel. The July contract shed 11.75 cents to end the day just above $10.53.

Down in Brazil, Safras & Mercado are predicting a massive crop. Analysts projected that Brazil’s soybean crop will come in at 119.2 MMT, a figure that blows the doors off the USDA’s April WASDE estimate.

Markets largely ignored the record March NOPA crush figure. The monthly report indicated that NOPA members crushed a whopping 171.858 million bushels. That figure was nearly 12% higher than the February report and more than 12% higher than the figure from the March 2017 report.

A strong crush was directly tied to ongoing drought problems in Argentina, which continues to provide American crushers with stronger margins. This big crush figure could fuel a downturn in the USDA stocks figure in the May WASDE report.

With an ongoing trade spat between the United States and China in focus, it’s important to take a look at the downturn in U.S. exports to its trade partner last month.

In March, China’s soybean imports totaled 5.6 MMT. That figure was actually down 11% compared to the same period in 2017. However, for the first quarter, China’s imports came in at 19.57 MMT.

Reports show that Brazil’s exports remain robust. For the week of March 30 to April 6, Brazil shipped 2.92 MMT of soybeans. That surpassed 2.64 MMT for the same week in 2017.

Corn Follows Wheat, Soy Lower Monday

Corn prices also retreated Monday despite a positive USDA exports report. The USDA agency reported total inspections of 1.505 MMT in corn for the week ending April 12. While that figure was off about 22.5% from the previous week, it topped the period for 2017 by about 12.5%.

May corn contracts fell 3.75 cents to close the day at $3.825 per bushel. The July contract shed 3.5 cents to end the day at $3.91 per bushel.

Mexico was the top destination last week for U.S. corn. Colombia, Taiwan, and Japan also reported large orders for the week.

This afternoon, the USDA reported that corn planting is behind last year’s progress.

The chart below notes considerable delays in Missouri and Kansas.

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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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