January 3: Frigid Winter Temps Heat Up Grain Prices

The weather in Chicago topped 10 degrees Fahrenheit, which is progress if you’re a moose. The ongoing chill across the heartland combined with drought conditions continues to push grain prices higher. Here’s your afternoon recap of grain prices from the Chicago Board of Trade.

Wheat Prices Press Higher

In Kansas City, March hard red wheat prices added 6.25 cents to close the day at $4.41 per bushel. The May contract added 6 cents to close the day at $4.54.

In Chicago, prices added 2.5 cents to end the day at $4.36 per bushel. The May SRW contract added 2 cents to close a tick above $4.48 per bushel.

Spring wheat prices also showed modest gains. The MGEX spring wheat price added 1.75 cents to close just under $6.20 per bushel. The MGEX spring wheat price added 1.5 cents to close the day at $6.27.

The reason for the uptick across the board is simple: It’s really, really cold outside. With a lack of snow cover due to drought conditions and abnormally low rainfall, this week’s blisteringly cold snap across wheat-producing states has threatened the quality of the winter wheat crop. USDA scouts issued eye-popping numbers on the decline in quality across the country, a topic that Brennan covered in the Breakfast Brief, and I dove into deeper this afternoon in GrainCents.

We’ll watch where projections from analysts shift due to the latest round of quality concerns. FarmFutures released a survey of analysts, which projected a 2 bushel decline to 47.9 bushels per acre.

Meanwhile, we received some interesting news out of Ukraine today. During the first half of the marketing season, the nation saw its exports decline by roughly 10%.

The harvest has played a big riole in that number, as production fell from last year’s record by about 5.6%. Ukraine exported 228.3 million bushels over the first six months. Meanwhile, wheat exports hit 411.5 million bushels for the six months.

One of the things I discussed in GrainCents today is that Ukraine is actually limiting its harvest size, despite its records. A law that prevents locals from selling farmland to international buyers is negatively impacting yields, which are just half of what we see in Germany.

Soybean Prices Follow Grain Prices Higher

While the weather in the U.S. pushed wheat prices higher, it was dry temperatures in Argentina that helped push January soybean prices up 4.75 cents to close a tick below $9.60.

March futures contracts gained 4 cents to close just under $9.69. We’re seeing ongoing delays in certain key regions in Argentina thanks to drier and higher temperatures. We continue to monitor the progress of La Nina, which could create a string of selling opportunties for farmers looking to capitalize on weather volatility.

Meanwhile, canola prices in Winnipeg showed some gains. The January 2018 contract added CAD $3.80 to close at $486.00.

Corn Prices are the Weakest of the Grain Prices

Corn prices didn’t quite perform as well as wheat and soy today. March corn prices shed 0.25 cents to close at $3.53. The May futures contract was flat and closed a tick above $3.61 per bushel.

The USDA crush report revealed that 525 million bushels of corn were used for ethanol and other industrial processes in November.

2018 Grain Market Outlooks

With more information flying at farmers than ever before, it’s difficult to get all of your insight in one place to help you make actionable decisions on your grain. That’s why FarmLead introduced GrainCents, a subscription service dedicated to telling farmers when to buy and hold their grain. 

Also, we provide regular price analysis and a deep-dive into the major (and minor) factors impacting your crop every day. In GrainCents right now, there are over 90 different factors that we have identified as either bullish, bearish, or noise for 12 different crops.

With this insight, we help you identify windows to get the best price possible for your crop. We also identify in GrainCents what percentage you should hold on your 2017/18 old crop, as well as where your sales should be on your 2018/19 crop. 

Next week, we’re giving our GrainCents subscribers a special report that is worth more than an annual subscription to the service on its own.

We’re unveiling our 2018 grain prices forecast exclusively to our GrainCents readers of these 12 crops.

Inside these reports, we’re going to discuss the critical factors that will affect your grain in 2018. More importantly, we’re going to begin to set our schedule for potential selling opportunities so that we can capture the best price possible in the year ahead.

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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