October 23: Wheat Prices “Wow” in Chicago Grain Trading

It was a huge day for wheat prices here in Chicago. SRW contracts jumped by double digits, while corn prices and soybean prices followed the wheat complex higher. Short covering and over-examination of the weather pushed prices higher at the Chicago Board of Trade.

Here is our daily recap of grain trading.

Wheat Prices Rally

SRW contracts popped more than 2% as the fall weather grew more pronounced. The December SRW contract added 10.75 cents and finished a tick below $4.37. The March 2018 contract added 10.5 cents and closed at $4.55.

In Kansas City, HRW contracts for December added 10.75 cents and finished at $4.335. The March contract showed the same gains and closed at $4.515. Spring wheat prices showed smaller gains on the day. The MGEX December Spring Wheat contract added 3.75 cents and closed at $6.15.

The March 18 MGEX contract added 3.5 cents and finished a tick below $6.28. Darrell Holaday at Country Futures said that harvest pressures in corn and spread unwinding help push prices higher on the day. [1]

The uptick came despite news that managed money grew more bearish last week and increased their net short position. Also, export figures came in below expectations.

Trade analysts had set a range of guesses from 11 million to 18 million bushels. The USDA reported just 11.9 million bushels.

The USDA also announced that 75% of winter wheat had been planted. That figure came in at the dead center of analysts’ projections heading into the report.

Perhaps it was just bad luck for Ben Potter at FarmFutures. The author released an interesting piece on future wheat prices on a day that prices jumped by double digits. His article “How Low Can Wheat Prices Go?” highlighted weaker export numbers. [2]

Looking ahead, we’ll be digging into some of the more bearish factors affecting wheat prices.

Corn Prices Rise on Harvest Delays

Corn prices were on the rise before Monday’s crop progress report. Sluggish harvest progress has held back fresh supply from the markets. Also, wet weather across the Corn Belt is likely going to hold back progress once again this week.

At 3 p.m. CST, the USDA announced that just 38% of the corn harvest is complete. That figure is 21 percentage points behind the five-year average. The number is also six points behind the 44% average projected by Farm Futures.

It wasn’t all bullish news though. The agency reported that corn rated good-to-excellent came in at 66% last week. That was a one-point jump from last week.

The December corn contract added 6.75 cents and closed the day at $3.5125. The March contract added 6.75 cents and closed a tick above $3.65.

Harvest pressure outweighed news from the CFTC that traders added to their net positions last week. Meanwhile, the USDA reported weekly export totals of 24.175 million bushels for the period ending Oct. 19. That was almost 100% higher than the previous week’s figure.

Export Gains Push Soybean Prices Higher

Soybean prices in Chicago were also in the green Monday.

The November contract added 2 cents to close the day a tick below $9.81. The January contract added 1.75 cents and finished the day at $9.91. The uptick complemented news that management money has increased its net long position by more than 37,000 contracts.

This week’s progress report showed that U.S. farmers made up a lot of lost ground over the last eight days. As of Oct. 22, the soybean harvest is 70% complete. That figure represented a 21-point jump over the previous week’s 49% rate. The harvest is now just three percentage points behind the five-year average.

Dollar Strength Won’t Deter Grain Prices

The U.S. dollar grew stronger Monday as markets speculated on the Federal Reserve’s next move on interest rates. Markets expect that the central bank will raise rates in December and two additional times in 2018.

The speculation complements side bets on whether President Trump will choose a new leader at the Fed or if he will appoint Janet Yellen to another term at the helm.

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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