November 7: Wheat Prices Facing New Pressure from Russia

Wheat prices slide into the red, corn prices can’t find any traction, and soybeans remain a bright side here at the Chicago board of trade.

A stronger U.S. dollar continues to work against U.S. farmers, while oil prices are hovering around a two-year high thanks to growing geopolitical uncertainty in the Middle East.

Here is your daily recap of grain prices.

What’s Up with Wheat Prices?

Another day, another dip in wheat prices in Chicago.

The December SRW contract shed 3.5 cents and closed the day a tick above $4.27. The March contract dropped 3.5 cents and finished just under $4.45.

December HRW futures fell 3.5 cents to close at $4.265. MGEX Spring Wheat did show gains on the day. The December futures contract in Minneapolis added 3.75 cents and closed at $6.3325.

Yesterday’s Crop Progress report generated some waves for wheat prices.

Winter wheat planting hit 91% and matched the five-year average. Crop quality, however, was a bit all over the place. 55% of the crop is rated good-to-excellent. While that is up from last week’s 52%, we’re seeing quality deteriorate in South Dakota.

So, why are wheat prices moving lower in Chicago?

Once again, it’s Russia.

It’s a story that we’ve told multiple times, but Russian exports are weighing down prices around the globe.

The nation’s agricultural ministry reported that exports for the 2017/18 calendar are up 22.7% year over year. Total exports from July 1 to November 1 totaled 13.015 million metric tonnes. [1]

In addition, we saw prices fall along the Black Sea, which put more pressure on international prices.

Russia is expected to produce a record crop in the coming year, which is going to pressure wheat prices well into the new year.

Soybean Prices a Bright Spot

The January soybean contract added another 2 cents and closed just 4 pennies away from $10.00 per bushel. The November contract set for expiration soon was up 2 cents and closed at $9.86. Cash prices popped 12 cents to finish at $9.47.

We’re seeing some support from headlines that China is buying more U.S. production. An announcement came that China will purchase an undisclosed amount of U.S. soybeans come during President Trump’s visit. [2]

China will also be upping its orders for more American beef, barley, and dairy products.

Soybean prices were also getting some support from yesterday’s Crop Progress report.

Though the broader harvest has nearly caught up to the five-year average, we still see some weakness across the Midwest.

Finally, we’re starting to see even more optimism around Thursday’s WASDE report. Consensus expectations call for a 0.2 bushel per acre decline from October figures. A decline in production to about 4.408 billion bushels would push the U.S. yield average to 49.3 bushels per acre.

December Corn Continues to Drag

December futures corn prices and cash corn prices both dipped 0.25 cents on the day.

To be completely honest, it was a dull afternoon of trading.

There were only two relevant data points today. First was the USDA’s report of another 130,000 metric tonnes sold to Unknown Destinations for the 2017/18 year.

Second, the USDA altered its trade data for September exports. The monthly exports don’t look good in comparison to the same period last year. Overall the agency pegged 3.52 million metric tonnes, a 43.6% decline from September 2016.

The U.S. markets continue to face pressure from steep export figures out of Brazil and Argentina.

On Deck Wednesday

Tomorrow, we’re going to dive into expectations ahead of the November WASDE report.

We’ll offer a full breakdown of analysts’ calls and look into what is on tap for the rest of the month for grain prices.


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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