Some commodity prices tumble as much as 5%
Rains in the U.S. Plains and in Argentina triggered sharp cuts in grain prices to start the week, with winter wheat, spring wheat, soybeans and soymeal all taking double-digit losses. Corn futures were also down nearly 2% on “spillover weakness,” despite another positive round of export data from UDSA.
Spring rains have arrived in some parts of the central U.S., with the promise of more to come. Areas that should see at least 1” of rain between now and March 26 include most of the Dakotas, Minnesota, Iowa, Missouri and pretty much all of the eastern Corn Belt. Weather this week is expected to be cooler than normal for much of the central U.S., with seasonally warm weather encroaching by the weekend.
Wall St. starts the week skittish ahead of the Federal Reserve’s next policy meeting later this week. The Dow was down 320 points in late-morning trading to 24,645 points. Most energy prices were moderately lower Monday morning, with crude oil down 0.4% to around $62 per barrel. The U.S. Dollar also softened moderately.
Corn prices took moderate losses Monday, with traders more focused on spillover weakness from other crops rather than a round of bullish export data, not to mention two large export sales. May and July futures each dropped 7.75 cents to close at $3.75 and $3.8325, respectively.
Corn spot basis bids were mixed but mostly steady to firm as futures tumbled on Monday, with some Midwestern locations ticking up 1 to 2 cents. Prices moved as high as 7 cents at one Illinois river terminal.
Private exporters reported to USDA two large export sales of corn on Monday. The first was for 8.1 million bushels for delivery to Japan during the 2018/19 marketing year, which begins September 1. A second sale of 4.5 million bushels for delivery to unknown destinations for 2017/18.
Corn export inspections for the week ending March 15 fared much better, with a total of 55.5 million bushels. That total hit the high end of trade estimates that ranged between 47 million and 59 million bushels, and it barely bested the prior week’s total of 54.2 million bushels. Japan was the No. 1 destination.
China could gobble up as much as 8.818 billion bushels of corn in 2018, according to the latest reporting from its Ministry of Agriculture and Rural Affairs. That amount edged 59 million bushels higher than earlier projections in February.
Preliminary volume estimates were for 400,108 contracts, well above Friday’s final tally of 311,437.
Soybean prices, propped up by months of dry Argentina weather, saw steep losses Monday after the country saw some much-needed rain over the weekend. May futures fell 27 cents to $10.2250, with July futures down 26.75 cents to $10.3350.
Canadian canola futures also dropped about 1%, with Argentina rains also the culprit in those losses.
Amid slow sales and tumbling futures prices, soybean spot basis bids firmed moderately at some Midwestern locations Monday, trending 1 to 4 cents higher.
Soybean export inspections totaled 18.0 million bushels last week, versus an average trade guess that ranged between 25 million and 38 million bushels. Volume also fell well below the prior week’s total of 34.2 million bushels, and it raised the weekly rate needed to meet USDA forecasts to 23.5 million bushels. The year-to-date totals for the 2017/18 marketing year is 12% lower than the pace set in 2016/17.
One big culprit was the relative absence of China, which typically accounts for 60% to 70% of the total volume of soybean export inspections on a weekly basis. It was still the No. 1 destination, with 4.6 million bushels, but only accounted for about one-fourth of total volume.
Preliminary volume estimates were for 238,834 contracts, nearly double Friday’s final count of 124,793.
Wheat prices took the largest losses of all commodities in Monday’s session after much-needed rains arrive at some of the most parched portions of the U.S. Plains. Kansas City HRW contracts took the biggest hit, with May futures dropping 26 cents to $4.7350. May Chicago SRW futures fell 17 cents to $4.5075, meantime, with May MGEX spring wheat prices tumbling 13.5 cents to $6.0550.
Wheat export inspections last week came in at 16.3 million bushels, which barely beat the average trade guess of 10 million to 16 million bushels. It also edged out the prior week’s total of 15.8 million bushels, but the weekly rate needed to meet USDA’s forecast moved upward to 20.2 million bushels. The week’s top destination was Morocco.
The European Commission’s crop monitor MARS sees the EU’s average soft wheat yield in 2018 up 1.4% from the year prior. Average yields could reach about 92 bushels per acre, according to the group, which also projects winter barley yields 1% higher and canola yields 0.8% higher.
Japan’s regular tender that closes on Thursday includes offers to purchase 4.7 million bushels of food-quality wheat from the U.S. and Canada.
Jordan issued an international tender to purchase 4.6 million bushels of animal feed barley, with a deadline of March 21. The country’s last four tenders of similar quantities of barley ended with no purchases made.
Preliminary volume estimates were for 182,837 CBOT contracts, moderately higher than Friday’s final count of 124,919.