January 2: Wheat Prices Pop from Winter Weather Snap

Wheat prices received a big boost Tuesday after blisteringly cold weather ravaged the Midwest. Wheat contracts in Chicago and Kansas City both showed solid gains as farmers across the region attempt to gage the impact of negative temperatures and unseasonably dry conditions.

While it still makes no sense why people live here in Chicago (the wind chill is minus 20), here is your daily recap of grain trading from the Chicago Board of Trade.

Wheat Prices Add More than 1%

March SRW contracts added 6.5 cents to close the day at $4.335. May contracts added 6 cents to close a tick above $4.46. Down in Kansas City, the gains were a bit more pronounced. The March 2018 HRW contract added 7.5 cents to close just under $4.35. The May contract added 7 cents to close at $4.48.

Spring wheat prices in Minnesota also received some support. March MGEX wheat contracts added 3.25 cents and closed at $6.18 per bushel. The May contract gained 3 cents and closed at $6.255.

Check out our 2017 review of spring wheat prices and durum wheat markets.

The big moves came after a wall of cold weather invaded from the north and turned most of the central United States into a set from Game of Thrones. Wheat acreage is already sitting at lows not seen in a century.

Now, we’re starting to hear chatter that the lack of a snow cover heading into the New Year’s weekend could have led to significant exposure and negatively impacted the quality of the crop. We already knew that there wasn’t much in the way of moisture heading into the new year.

There aren’t many places from Colorado to Illinois that had even 40% of the typical wet weather for the months of November and December. In a GrainCents piece loaded today, I looked at the potential damage to the US winter wheat crop, and the implication for winter wheat prices.

This week’s cold snap puts a big focus on weather forecasts moving forward. The temperatures are expected to return to seasonal norms starting this weekend. How long will that last?

There was quite a bit of data in the wheat complex today. The USDA reported a 32% weekly slide in exports – all 274,506 metric tonnes for the week. Since June, exports are down 37 million bushels than the previous marketing year.

If that doesn’t scream “Russia,” then nothing does.

But there’s more to the Russia factor. On the same day that Russia cut its export forecast from 27 million metric tonnes to 26 million, Russia increased its 2017 wheat harvest number by 16%.[1]

This week, we’ll be unveiling our 2018 winter wheat forecast, but before we do be sure to check out our 2017 Review of Winter Wheat Prices / Markets..

Corn Prices Follow Wheat Higher

Despite a slew of bearish data Tuesday, corn prices found gains in Chicago.

The March corn contract added 2.5 cents and closed just above $3.53.

Corn export numbers fell within range of trade expectations this morning. Japan and Mexico are still buying corn, with both country topping 7.2 million bushels for the week.

But my attention was abroad as I was trying to keep my mind off the weather.

Over in Europe, the European Commission increased its corn production figure for the current year by 100 million bushels. The new projection is 2.5432 billion bushels for the year.

Meanwhile, Brazilian corn exports are booming.

And I mean… booming.

For the month of December, Brazil shipped 157.2 million bushels. That was almost a 300% jump from the same period last year.

Later this week, our 2018 soybean forecast will be released. But take a look back at the year we just finished with our 2017 Review of Corn Prices / Markets.

Soybean Prices Show Some Spirit

Finally, soybean prices did find some support this afternoon. The January contract added 3.25 cents and closed at $9.55 per bushel. The March contract fell just short of $9.65 after adding 3 cents on the day. The trade shrugged off a few lackluster figures in exports and crushing.

Exports were strong and in line with trade expectations, but still fell short of the previous week’s outflows. The USDA reported export inspections of 41.9 million bushels. The number doesn’t look too bad until you see the 58.4 million shipped during the same week last year.

The silver lining is that China continues to buy from the U.S. Despite the new restrictions on quality and foreign material, China will remain a viable customer.

Meanwhile, the November crush number hit 173 million bushels. That was slightly off from the 176 million reported in the previous month, but it still beats last year’s monthly figure.

Catch up on what’s happening with the 2017 Review of Soybean Prices / Markets.

2018 Grain Market Outlooks

With more information flying at farmers than ever before, it’s difficult to get all of your insight in one place to help you make actionable decisions on your grain. That’s why FarmLead introduced GrainCents, a subscription service dedicated to telling farmers when to buy and hold their grain. 

Also, we provide regular price analysis and a deep-dive into the major (and minor) factors impacting your crop every day. In GrainCents right now, there are over 90 different factors that we have identified as either bullish, bearish, or noise for 12 different crops.

With this insight, we help you identify windows to get the best price possible for your crop. We also identify in GrainCents what percentage you should hold on your 2017/18 old crop, as well as where your sales should be on your 2018/19 crop. 

Next week, we’re giving our GrainCents subscribers a special report that is worth more than an annual subscription to the service on its own.

We’re unveiling our 2018 grain prices forecast exclusively to our GrainCents readers of these 12 crops.

Inside these reports, we’re going to discuss the critical factors that will affect your grain in 2018. More importantly, we’re going to begin to set our schedule for potential selling opportunities so that we can capture the best price possible in the year ahead.

Go here now to get your copy of the 2018 grain markets forecast for your crops, 

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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