February 16: Wheat Prices Retreat Friday

Wheat prices led the grain complex lower Friday as traders prepared for the upcoming holiday weekend.

The day had started with small gains due to news of harvest delays down in the Brazilian fields. But profit-taking appeared to be too much of an urge for some.

There will be a limited publishing schedule on Monday. Before we head out for the weekend,  let’s do a quick recap of events and reaction at the Chicago Board of Trade.

Wheat Prices Dip Friday

In Chicago, March SRW contracts shed 4 cents to close the day just under $4.58 per bushel.

The May contract shed 3.75 cents and closed the day at $4.715. Investors were taking some gains off the table ahead of the three-day Holiday weekend.

In Kansas City, the March HRW contract showed surprise gains. That contract closed the day at $4.785 after a 0.5-cent gain. The May contract added 0.5 cents to close at $4.935.

Finally, spring wheat prices were off in Minneapolis. The March contract shed 3.25 cents to finish just above $6.05 per bushel. The May contract shed 3 cents to close just under $6.16. That downturn came after Informa hiked its spring wheat acreage figure from last year’s total. Informa analysts are pegging spring wheat acreage at 11.25 million acres.

Soybean Prices Retreat Too

Soybean prices showed a few small losses after a solid week of broader gains. The March 2018 contract fell 2.75 cents to finish at $10.215. The May contract shed 2.5 cents and closed at $10.325. Cash prices in Chicago added 8.5 cents and finished at $9.915.

Markets are still focusing on the state of the Argentine crop.

Today, the Buenos Aires Grain Exchange announced that just 11% of the nation’s crop is rated good or excellent. That figure compares dismally against the 56% rated poor or very poor.

Today’s export news was positive. About 28,000 MT of soybean oil is destined for South Korea.

Down in Brazil, the national harvest is pegged at 17% complete. That’s nine percentage points back from the past last year and three points behind the five-year average. There are also reports of very high moisture levels in what has been gathered so far this season.

Eduardo Sierra, a climate expert at the BAGE, says that there isn’t much chance of heavy rains in the weeks ahead. The expectation is that persistent dryness will continue to lead the forecasts down in Argentina. This may press weather premiums even higher. [1]

Corn Prices Show Marginal Dip

Barely anything significant happened with corn prices on Friday.

The March contract shed 0.25 cents and finished the day at $3.675 per bushel. The May corn contract shed 0.5 cents to close at $3.75.

Prices barely moved despite another positive export update from the USDA. The agency reported a private sale of 116,000 MT to Japan. It has been a solid start for corn exports in February.

Corn exports are gaining ground on last year’s figures. We’re still 12.6% behind last year’s pace, but it could have been much worse. Factors supporting U.S. corn exports right now include Argentina’s weather woes and rising prices in Ukraine.

The markets also largely ignored news out of Argentina today.

It has been priced in for a bit that markets expect crop quality to be bad in South America due to heat and dryness. The Buenos Aires Grain Exchange said today that just 14.3% of their crop is rated good or excellent.

That’s an ugly number compared to the 57.6% rated poor or very poor.

Oil Prices Snap Two-Week Losing Streak

Up in New York, the price of WTI oil was trading at $61.67 in the late afternoon. U.S. oil finished higher as a weaker U.S. dollar slipped to a three-year low.

This news offsets supply concerns after U.S. production topped 10.27 million barrels per day. That figure is a new U.S. record. But there is plenty more oil on the way.

Analysts are expecting that crude oil production in the U.S. will hit 11 million.

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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