April 25: Wheat Prices Push Higher as Markets Eye U.S. Exports

Markets largely ignored prospect of “planter friendly” weather forecasts in the days ahead, and instead focused on the anticipation of a strong export report on Thursday. Winter wheat prices continued to rally today as traders chattered about crop quality from Monday’s USDA report. 

Wheat Prices Roar Higher Wednesday

Next week, the annual Hard Winter Wheat crop tour will kick off, and traders are starting to anticipate that the USDA’s recent crop reports are a sign of low quality to come.

May SRW wheat prices in Chicago added 13.75 cents to close the day above $4.86. The July contract added 14.75 cents to close at $4.99 per bushel.

In Kansas City, May HRW wheat prices popped 14.5 cents to end the day at #5.07 per bushel. The July contract added 14.5 cents to end the day at $5.265.

In Minneapolis, the May MGEX spring wheat contract added 6.75 cents to close the day at $5.995. The July contract added 7.75 cents to end the day at $6.065 per bushel.

Tomorrow, we’re digging into weekly export sales and shipments. Estimates call for sales of old crop between a reduction of 100,000 MT to an uptick of 200,000 MT. New crop expectations fall between a range of 150,000 MT to 350,000 MT.

Corn Prices Move Higher

Reports of dryness across Brazil helped push prices higher in Chicago, while traders largely ignored a weak production report in the ethanol complex. In Chicago, May corn prices added 5.25 cents to close the day at $3.865. The July contract added 5.75 cents to end the day just under $3.96. Reactions to slow corn planting also offered a small boost to corn prices.

Today, the Energy Information Administration released its report on ethanol production for the week ending April 20. Surprisingly, the report indicated that U.S. ethanol production fell below 1 million barrels per day, and hit its lowest level (985,000 bpd) since October 2017.

Tomorrow, we’ll be paying close attention to the weekly export figures. Trade expectations call for an old crop range between 800,000 MT and 1.2 MMT. New crop estimates fall betweel 200,000 MT and 400,000 MT.

Finally, in China, acreage is expected to decline in 2018 by roughly 815,000 acres. The Ministry of Agriculture and Rural Affairs made the announcement today, and it could have sweeping ramifications on other markets. China has been reducing its corn reserves and the decision to plant less corn is intriguing ahead of its E10 biofuel mandate slated for 2020. It appears that domestic farmers are adjusting to the possibility that the country may slap tariffs on U.S. soybeans.

Soybean Prices Find Momentum 

The May soybean contract in Chicago added 5.25 cents to close the day at $10.275 per bushel. The July contract added 5.25 cents and ended the day a tock above $10.39 per bushel.

Tomorrow, soybean exports will be reported by the USDA. Trade estimates fall between 400,000 MT and 700,000 MT. The new crop range falls between 100,000 MT and 300,000 MT.

Meanwhile, the USDA’s attaché in Brazil forecasts that the country’s 2018/19 soybean crop will come in at 115 MMT. That figure is the same as the current estimate by the USDA for 2017/18.

As we noted, China may grow even more soybeans in the year ahead. It will also likely turn to other countries in an effort to reduce its reliance on American beans. But where will they turn, and what countries would have the capacity to increase their export game?

That is a topic that we are going to be discussing in depth this week for our GrainCents readers. Our premium content provides farmers and traders with a leg up on insight that you will not find anywhere else. If you have exposure to the soybean market, be sure to get a free three-week trial to GrainCents right here.

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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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