I am in Baltimore about to get on a plane to Ottawa. But that doesn’t mean that I don’t have a line into Chicago to discuss grain prices.
Today, we watched wheat traders largely ignore concerns about quality in the plains. Meanwhile, some bullish numbers in South America offered support to both corn prices and soybean prices. Let’s dive into the events that shaped trading today at the Chicago Board of Trade.
Corn Prices Eek Out Gains
Corn prices were on the rise Tuesday thanks to a large sale of the crop to South Korea,.
May corn prices in Chicago added 1 cent to close just below $3.92. The July contract was up 1.25 cents to finish the day at $3.9975. That sale to South Korea came in at 210,000 MT for the 2017/18 crop year.
Meanwhile, we watched some bullish news out of South America. Dr. Michael Cordonnier slashed his projection for Argentina’s corn crop to 34 MMT. His Brazil projection remained at 86 MMT. The USDA’s corn production forecast for Argentina and Brazil is at 36 and 94.5 million tonnes respectively.
Planting is picking up across the country. Down in Texas, farmers are 26% complete with their corn planting, a figure that is well ahead of the 18% average over the last five years.
Meanwhile, we watched Turkey fail to make any purchases from its recent tender, while China failed to sell any of the 2.1 million bushels that it put up for auction.
Tomorrow, we’ll be turning our attention to ethanol data to see if production continues at its breakneck pace. We’ll also be looking at South Korea’s latest tenders, which are seeking to purchase about 1 MMT over the next two weeks.
These tenders could produce higher global prices. Ukraine’s corn crop is paralyzed in the supply chain, and crop quality has plunged in Argentina.
Soybean Prices Continue to Rebound
It was another good bounce back day for the soybean complex. We saw May futures contracts add another 7.5 cents to close the day at $10.485. The July contract added 8.5 cents to finish at $10.595.
In addition to the technical support we saw following Friday’s big selloff, we got more bullish data about the stability of the Argentine crop. Dr. Cordonnier slashed his production estimate for the country down to 43 MMT, a 2 MMT cut from his previous estimate.
That number is 4 MMT lower than the estimate from the USDA in the March WASDE.
Dr. Cordonnier kept his Brazilian estimate at 114 MMT.
Right now, bulls are looking for a reason to rally, and it appears that there is still cutting to be done by the USDA on Argentina’s production.
Looking ahead, we’re going to need to keep our ear to the ground for updates from local analysts who can help signal these potential cuts in the April WASDE. The Cordonnier cut to 43 MMT sits a bit higher than the 42 million tonnes recently figured by the Buenos Aires Grain Exchange.
As traders look for precedent on drought-based speculation on soybean prices, we recently eyed trading in 2008/2009 and 2015/16.
We discovered something that’s very important when it comes to soybean prices and canola prices.
Wheat Prices Retreat
To round out grain prices, let’s look at the wheat complex.
Today, Chicago SRW prices dipped 4.25 cents to close the day at $4.865. The July contract shed 3 cents to finish at just above $5.07.
Down in Kansas City, prices fared slightly better, but there was still a decline. May Kansas City HRW prices fell 2.25 cents to $5.20.
Spring wheat prices were slightly improved. The May MGEX futures added 0.5 cents to $6.25.
Today, it was all about quality across the country. We watched the USDA rate Kansas wheat at 12% “good to very good.” That was down 1% and erased last week’s small gain in quality.
The state’s crop is now rated 53% “poor to very poor.” A 3 percentage-point increase from last week is more evidence that this year’s drought has punished the winter wheat crop.
We did see slight increases in crop quality in Oklahoma and Texas, but it’s now a question of whether late changes in the weather will make any difference.
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