April 3: Wheat Prices Pop in Chicago on Progress Report Numbers

It was a solid day for wheat prices on Tuesday as markets reacted to yesterday’s crop progress report. Winter wheat crop conditions are sitting at their lowest level in 16 years thanks to the ongoing drought conditions across the country. Corn prices and soybean prices were ticking higher. Here’s a recap of trading from the Chicago Board of Trade.

Wheat Prices Jump 2% in Chicago

The USDA Crop Progress report from Monday offered strong support in the markets.

May SRW wheat contracts got a nice pop today in Chicago. The May contract added 11.25 cents to close at $4.575. The July SRW contract gained 10.5 cents to end the day at $4.74.

Down in Kansas City, HRW contracts soared even higher. The May 2018 HRW contract gained 17.25 to close the day just under $4.85 per bushel. The July HRW contract added 16.5 cents to close above $5.03 per bushel.

Up in Minneapolis, the spring wheat prices did see some gains. The May MGEX contract added 9.5 cents to close the day at $5.83 per bushel. The July contract added 9.75 cents to close at $5.9225.

Yesterday, the crop progress report indicated that just 32% of the U.S. Winter Wheat crop was rated good or excellent as of Sunday. As Brennan explained in this morning’s Breakfast Brief, this was the first full report for the crop, and the numbers were awful in certain states.

The overall 32% rating for the crop is 19% lower than the same period last year. In the 18 states in the report, roughly 30% of the crop was graded very poor or poor.

May Corn Prices Near $3.90

Delays in corn seeding across the Midwest helped push corn prices higher on Tuesday.

Corn prices continued their upward tick as the May contract passed $3.88 per bushel in Chicago. The May 2018 contract added 1.25 cents to close at $3.885. The July contract gained 1.5 cents to end the day a tick above $3.97.

Across the Midwest, the weather has been cold, fueling delays in planting.

Ahead of the USDA WASDE report next Tuesday, we’re paying very close attention to the numbers out of Brazil. First is the news that Brazil shipped more than 605,000 MT of corn last month. The Trade Ministry said that the March shipment figure was roughly 150% higher than the same period last year.

Meanwhile, Dr. Michael Cordonnier held his production estimate for Brazilian corn at 86 MMT. He slashed his Argentine production figure by 1 MMT to 32 MMT. That is slightly above Informa’s estimate that corn production will come in at 31.5 MMT. As we’ve noted, there have been rumblings that the final number could fall below 30 MMT, a number that would be a dagger for Argentina’s farmers.

Once again, we’re paying close attention to the ongoing standoff between the United States and China over trade issues. Over the weekend, China announced intentions to slap tariffs on 128 U.S. products that includes a few key agricultural goods. However, that list does not include corn and soybeans for the time being. Markets are looking for clues into whether China may later slap these two key exports with tariffs or further trade restrictions.

Soybean Prices Get Small Boost

The May soybean contract jumped 2.5 cents to close at $10.38. The July contract added 3.0 cents to close the day above $10.49. Soybean meal and soybean oil prices also saw small gains on the board. We can thank a positive crush report from the USDA and additional cuts to estimates to South American production ahead of next Tuesday’s WASDE report. We also were paying attention to news from the U.S. Trade Commission on antidumping duties tied to Argentina and Indonesia. The government agency has set duties at 60% and 276% on biodiesel imports from the respective countries.

Private estimates are in on Brazilian and Argentina’s soybean production.

Dr. Michael Cordonnier cut his Argentine production figure to 40 MMT (a 1 MMT reduction). Meanwhile, Informa has pegged Argentina’s output at 39 MMT.

In neighboring Brazil, Dr. Cordonnier held his production estimate at 115 MMT, which is shy of the 116 MMT forecasted by Informa.

Meanwhile, the USDA reported in its Fats and Oils report that the February crush came in at 164.94 million bushels. That was about a 9% jump from the same period last year.

Canola prices also saw some gains on the day. The May 2018 canola contract added CAD $1.70 to close the day at CAD $526.50. The July contract added CAD $1.60 to close at CAD $532.00.

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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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