March 26: Wheat Prices Wilt, Ignore Broader Market Rally

Someone must not have told grain traders that the stock market was on a tear today. Wheat prices in Kansas City fell by more than 10 cents, while corn prices and soybean prices in Chicago pushed lower.

The Dow Jones surged more than 650 points with 15 minutes left of trading Monday. The index had its third-largest single day of gains in history on word that China and the United States have begun negotiating a bilateral policy to avoid a potential “Trade War.”

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

Wheat Prices Slump on Weather Woes

It was another bad day for wheat prices. A weak trade report combined with concerns about weather once again.

In Chicago, May wheat contracts shed 6 cents to close just above $4.54. The July contract dropped 5 cents and closed at $4.715.

In Kansas City, wheat prices suffered a much worse fate. The May 2018 HRW contract shed 11 cents to close the day a tick above $4.68 per bushel. The July contract dropped 10.5 cents to close the day just under $4.88 per bushel.

USDA export inspections for the week ending March 22 came in at 278,815 MT.

Exports came in 41.5% lower than the previous week. That figure was also off about 49% from the same period last year.

While we didn’t receive too much data out of the U.S. ahead of the Prospective Plantings report, we did get an update on crops in Europe. The European Commission slashed its exports projection for the 2017/18 calendar.

The European Commission projects that wheat exports will come in at 845.1 million bushels, down from 881.8 million bushels.

The EC projects that 2018/19 exports of wheat will come in at 929.6 million bushels. That figure went unchanged in this report.

Soybean Prices Retreat Again

May soybean prices shed 2.75 cents to close the day at $10.255. The July contract lost 2.75 cents to close the day at $10.365.

Overall, soybean export numbers were better than expected. The 584,612 MT for the week ending March 22 was 5% higher than last year. The number was also about 17% higher than export inspections from last week.

Today, the USDA reported a private export sale of 132,000 MT to unknown destinations.

The agency also reported a sale of 120,000 MT of soymeal to Spain.

Meanwhile, we learned today that China imported 3.345 MMT of U.S. soybeans in February. That was a 24% decline from the same period in 2017.

Where did the deficit get filled? From Brazil. The Brazilians shipped 154% more soybeans in February 2018 than in the same month last year (a total of 1.746 MMT.) As we have noted, Brazil has become the primary source of origination for Chinese farmers. Improved protein content and fewer quality assurance concerns have pushed Brazil’s exports to the forefront.

We’re still keeping an eye on trade expectations for the Prospective Plantings report later this week. Trade estimates indicate that soybean acreage will outpace corn acreage in 2018/19. Be sure to check back with us live on Thursday for an instant recap of acreage estimates.

Corn Prices Slip

Corn prices dipped Monday in Chicago. The May contract shed 3.25 cents to finish the day at $3.74 per bushel. The July contract dropped 3.25 cents to close trading at $3.825.

Today, the USDA reported that for the week ending March 22, the U.S. shipped 1.154 MMT of corn. That was a 19% drop from the previous week and a whopping 26.5% lower than the shipments for the same period last year.

While Chinese soybean imports are falling, things are looking better on the corn front thanks to ethanol. Last month, China imported the largest amount of ethanol to its shores since May 2016. That said, the country did pull back from corn imports.

The nation brought in 1.243 million barrels for the month, with 1.189 million barrels coming from the United States.

A quick reminder, China is likely going to need to import even more ethanol in the future. The nation’s E-10 mandate will kick in starting in 2020. That said, it remains very unlikely that China is going to have enough capacity in place to produce the amount of ethanol that it would require to meet the mandate. With that in mind, they could always just scrap it.

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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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