August 6: Wheat Prices Surge in Chicago

Wheat prices rallied in Chicago thanks to falling crop conditions and news that Ukraine plans to limit milling wheat exports during the new marketing year. Meanwhile, soybean prices slumped again thanks to ongoing uncertainty in trade relations between the United States and China. 

Here’s what else you need to know from the Chicago Board of Trade.

Wheat Prices Surge in Chicago

Wheat prices jumped more than 3% in Chicago on Monday thanks to news out of Ukraine. With prices at three-year highs, markets are keeping a close eye on drought conditions across Europe and the Great Plains. Ongoing dryness has pushed Germany to its smallest expected crop in nearly 15 years. 

September 2018 wheat contracts in Chicago added 18.25 cents to close at $5.745. The December contract added 17.5 cents to hit a tick above $5.97. 

In Kansas City, the September HRW contract added 18.75 cents to close at $5.86. The December HRW price gained 18.75 cents to close at $6.14 per bushel. 

Markets largely ignored the weak exports numbers released by the USDA this morning. The agency said that for the week ending August 2, total U.S. wheat export inspections hit 12 million bushels (325,486 MT). That figure was 14% lower than the previous week’s exports. However, the figure was about 50% higher than the same period in 2017. 

Markets were more optimistic about the statement from the Ukrainian Agricultural Ministry. The agency proposed to allow its exporters to ship 8 MMT of milling wheat during the 2018/19 marketing year. That would be a 20% cut from the 10 MMT exported last year, according to agency numbers.  

The USDA reported that 90% of the U.S. winter wheat harvest is now complete. That figure is two points below the five-year average. The harvest is now complete in nine of the top 18 producing states. 

Spring wheat prices also saw big gains Monday. The September MGEX contract in Minneapolis added 15.5 cents to close the day a tick above $6.28. The December contract added 15.5 cents to close the day at $6.455. 

The USDA reported that 13% of the spring wheat harvest is now complete. That figure is one point behind the five-year average. Meanwhile, the agency reported that 74% of the spring wheat crop is rated G/E. That figure is four points below the previous week’s rating of 78%. The figure is also much higher than the 32% G/E rating at this point last year.  

Soybean Prices Slump in Chicago

September 2018 soybean prices slumped 8.75 cents to close just under $8.83. The November contract shed 8.75 cents to finish the day at $8.935 per bushel.

This afternoon, the USDA reported that total export inspections came in at 32.8 million bushels (893,109 MT)last week. That figure is 16% higher than what the agency reported in the previous week. It’s also 30% higher than inspections from the same period in 2017. 

Today, the USDA reported the quality of the US soybean crop. Analysts had expected that the agency would report that 69% of the crop was rated good-to-excellent. The agency instead reported that just 67% was rated G/E. That figure is off 3 points from last week. However, it is still seven points higher than the 60% average over the last five years.  

Corn Prices Tick Higher 

The September 2018 corn contract added 1.25 cents to close at $3.71 per bushel. The December contract gained a penny to close a tick above $3.85. 

Expectations for crop quality overshadowed news that Europe’s corn imports are off 24% from the same period last year. This afternoon, the USDA reported its weekly Crop Progress report. Markets expected that U.S. corn crop rated G/E would fall from 72% to 71%. Sure enough, analysts were correct when the agency reported 71% G/E. That figure is 11 points higher than the five-year average.

Meanwhile, news out of Ukraine indicated that U.S. corn exports are on the rise. As the nation is on the verge of a record corn crop, its new crop exports are sitting at 35.5 million bushels through July. 

Finally, the USDA reported that weekly corn inspections came in at 50.7 million bushels (1.287 MMT). That figure is 22.5% lower than the previous week, and 31.5% lower than the same period in 2017.

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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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