May 17: Why Wheat Prices Made Gains Thursday

Wheat prices in Chicago were the lone bright spot Thursday in the grain complex. Corn and soybean prices fell thanks to lackluster export numbers and a round of technical selling.

Meanwhile, investors in New York and Chicago were both paying close attention to the Federal Reserve. The combination of tightening labor markets and rising inflation have markets expecting interest rates to rise again in June.

Wheat Prices Press Higher in Chicago

In Chicago, July wheat prices added 3.25 cents to close the day at $4.975 per bushel. The September SRW contract added 3.25 cents and ended the day at $5.135 per bushel.

In Kansas City, HRW contracts for July added 5 cents to end the day at $5.19. The September contract added 5.25 cents to end the day just under $5.38 per bushel.

Thursday was all about export numbers. The USDA reported weaker than expected weekly sales the agency said that the U.S. sold 63,507 MT for old crop. New crop sales came in at 131,681 MT.

So, what helped push wheat prices higher? We are seeing some indications that dry weather in Australia is adding support. Meanwhile, forecasts indicate that Russian production may be lower than traders previously expected.

Spring wheat contracts for July added 3.5 cents to end just under $6.15. The September MGEX contract added 2.75 cents to close the day at $6.205 per bushel

Soybean Contracts Slide 

Soybean prices continued to go in reverse on Thursday. The July contract in Chicago fell 4.75 cents to close at $9.95. The August contract shed 4.5 cents to end the day just under $9.99 per bushel.

The USDA said today that old crop soybean sales came in at 281,850 MT, a figure that was just short of trade expectations. That figure was a 20% drop from the previous week. New crop sales hit 224,650 MT.

Weekly U.S. soybea exports came in at 654,500 MT, as noted by the figures below.

That figure was a 39% jump from the previous week. The top five locations China (129,500 MT), the Netherlands (127,900 MT), Egypt (112,400 MT), Mexico (78,500 MT), and Indonesia (44,900 MT).

The agency also reported a private sale at 132,000 MT for unknown destinations.

Corn Prices Skid Again

The July corn contract shed 4 cents to end the day a tick above $3.95. The September contract fell 4 cents to close at $4.035 per bushel.

Today, the USDA reported strong export sales for the week ending May 10. The agency said that the U.S. sold 985,702 MT (38.8 million bushels) of old crop. That figure was about 250% higher than the same period in 2017. New crop sales came in at 129,240 MT (5.1 million bushels).

Exports came in at 1,563,800 MT (61.6 million bushels), a 12% decline from the previous week. Let’s look at the numbers.

The top five destinations were Mexico (364,900 MT), Japan (318,000 MT), Taiwan (162,300 MT), Vietnam (120,600 MT), and Colombia (80,800 MT).

On the global front, markets were digesting news about China’s latest round of corn auctions.

The nation sold a whopping 56.2 million bushels on Thursday. This is part of the country’s ongoing effort to bring the local supply and demand market to equilibrium ahead of its planned E-10 standard in 2020. The country is also cutting domestic acres of corn in favor of other crops like soybeans in the year ahead.

What’s Happening in Trade?

The imposed deadline of House Speaker Paul Ryan was today. Ryan had argued that the U.S., Canada, and Mexico needed to have reached a deal on NAFTA for Congress to reach a deal. Today, Canada’s ambassador to the United States said that the three nations are getting close to a deal.

“We’re pretty close,” said David MacNaughton. “There’s still some tough issues, but do we really want to kick this down the road and miss the opportunity to do a lot of the good work?”

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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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