February 28: Wheat Prices Surge to Close February Trading

It was a massive day for wheat prices in Chicago and Kansas City, despite another uptick in the U.S. dollar.

Prices surged more than 4% on growing concerns about winter wheat crop quality and available supply as the grain prepares to come out of dormancy. Recent reports from the USDA indicate very little wheat rated good-to-very good.

Meanwhile, soybean prices and corn prices both pushed higher on the day. Let’s take a look at wheat prices and more at the Chicago Board of Trade.

Wheat Prices Surge Wednesday

Today, dry weather across the plains continued to push wheat prices higher. Looking at the forecast over the next 10 days, it doesn’t appear to be any hope that rains will arrive, let alone make much of a difference to help bolster crop quality.

In Chicago, March SRW prices surged a whopping 21.25 cents to push the contract to $4.845 per bushel. The May contract added 18 cents to end the day at $4.95.

Down in Kansas City, we saw similar gains. The March HRW contract popped 19.25 cents to close the day at $5.0825. The May contract gained 17.5 cents to finish the day at $5.2225.

Spring wheat prices also pushed above $6.00, a positive development after we saw the winter-spring spread contract in recent weeks. The MGEX contract for March ended the day up 9.5 cents to close at $6.06 per bushel.

The May contract gained 12.75 cents to close just under $6.22.

Tomorrow, we’re turning our attention to the weekly export report from the USDA. Trade estimates are all over the board, ranging from 200,000 MT to 500,000 MT forold crop  last week.

Corn Follows Wheat Prices Higher

The March corn price added 4 cents to finish the day at $3.745. The May contract added 2.75 cents and closed the day at $3.82 per bushel.

Today’s uptick in grain prices even helped push oats prices higher. The March oats contract gained 3 cents to close the day at $2.63, while the May contract was above $2.70 after a 0.5-cent gain.

There hasn’t been a lot of domestic data moving corn prices. The bulk has centered on weather speculation in the U.S. in the months ahead and the ongoing drought in Argentina that continues to erode crop quality and production estimates. As analysts prepare for next week’s WASDE report, many have taken to slash production expectations for the country.

Today, we did see that U.S. ethanol production is holding steadily above 1 million barrels per day. Last week, the US totaled 1.044 million bpd, according to a report released by the Energy Information Administration earlier today.

Tomorrow, we’ll be looking at export numbers again. The high-side of analysts’ expectations says 1.4 million.

Soybean Prices End February at 7-Month Highs

February was a good month for farmers looking to move old crop. On the final day of the month, March soybean prices added another 7 cents to close at $10.45. The May contract gained 6 cents to close at $10.555.

One could cite just the ongoing dryness in Argentina for the uptick, but we did see a 250,000 MT shipment of soybeans to unknown expectations. It’s positive to see that U.S. exports continue to remain respectable despite concerns about global trade.

Canola prices also pushing higher thanks to their rival’s run. The March contract in Winnipeg hit CAD $520.30 per ton, while the May contract added CAD $3.00 to close the day at CAD $524.00.

Tomorrow, we’ll be turning our attention back to the weekly export figures. Export sales are forecasted to come in between 400,000 MT and 700,000 MT for the week, according to trade analysts.

The US Dollar Runs Higher

Today’s gains came despite an uptick in the U.S. dollar.

Yesterday, Federal Reserve Chair Jerome Powell offered his first testimony before Congress on monetary policy and the U.S. economy.

Powell said that he is optimistic about the state of the economy, but suggested that the U.S. central bank must continue to proceed with interest rates hikes to help stave off inflation.

Markets are now expecting up to four interest rate hikes in 2018.

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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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