Markets

GRAIN MARKETS: August crop prices end on a high note

Corn prices score big gains.

By Ben Potter

The last day of August proved to be positive for grains, with prices jumping up at the open and holding on for solid increases for the day. It was a different story when taking a step back to view the entire month, however, with prices undergoing one of the largest downturns in the past three years.

Hurricane Harvey, now categorized as a tropical depression, still garners news headlines as cleanup from damaging floods continues in south Texas. That includes disruptions to refineries and pipelines that are already creating a significant impact on global energy prices. About one-quarter of U.S. refineries are currently off line. Additional flooding is possible in the lower Mississippi and Ohio river valleys over the next several days. Farther north, the U.S. Army Corps of Engineers reported that the Mississippi River was closed to vessel traffic due to cracks found in the gate at Melvin Price Locks & Dam in East Alton, Ill.

A weakened dollar in 2017 – sparked by improved economic outlooks for key U.S. trading partners, including Europe and Japan – has given U.S. export competitiveness some added momentum through the end of August. The U.S. dollar has lost about 7% of its agricultural export-weighted value since the beginning of the year, according to the U.S. Department of Agriculture.

Stocks were up modestly, with the Dow gaining 57 points by noontime for 21,928. Dow Jones futures have climbed 11.20% so far in 2017.

Corn prices scored big gains, with December 2017 prices climbing steadily throughout the day to add 12.25 cents and close at $3.5775.

For corn, there were 7.4 million bu. of old-crop sales and 31.7 million bu. of new-crop sales for a total of 39.1 million bu. – nearly double last week’s total of 20.7 million bu. and beating trade estimates significantly. Top destinations included China, Japan, Colombia, Peru and Guatemala. Cancellations of 4.81 million bu. were also reported, mostly coming from unknown destinations, with a small fraction also coming from Nicaragua and Venezuela.

Preliminary volume was 350,563 bu., down significantly from Wednesday.

Soybean prices saw double-digit gains on Thursday. November 2017 futures traded as high as $9.37/bu. overnight before dropping a few cents and staying there to close at $9.4525. That’s still 12 cents higher than yesterday’s closing price. September 2017 added another 13.25 cents to its total, closing at $9.3625.

Soybean export shipments fell beneath USDA forecasts, with 25.2 million bu. Total sales of 61.8 million bu. topped from last week’s total of 59.1 million bu. Top destinations included China, the Netherlands, Japan, Indonesia and Bangladesh. Cancellations totaling 12 million bu. were reported last week for unknown destinations, Pakistan and Costa Rica.

Private exporters reported to USDA sales totaling 4.9 million bu. of soybeans to deliver to currently unknown destinations during the 2017-18 marketing year, which begins on Friday.

Data from the European Union indicate that Europe's soybean imports for the 2017-18 season (which began July 1) are down 15% compared to the same time span from a year ago. Soybean meal imports, in contrast, are up 2% from a year ago.

Preliminary volume estimates were 155,950 bu., in line with Wednesday’s total volume.

Wheat prices were mixed as winter wheat prices surged and spring wheat prices floundered. December Chicago, Ill., soft red winter wheat prices ended up 4.75 cents to close at $4.2975, while December 2017 Kansas City, Mo., hard red winter wheat prices gained another 6.5 cents to close at $4.2925. Meanwhile, spring wheat continued its weeklong slide, with December 2017 prices dropping another 15.25 cents to finish at $6.4025.

Wheat saw sales of another 20.8 million bu. last week, ahead of the 14.2 million bu. from the prior week and trade estimates of 16.5 million bu. Export shipments of 26.5 million bu. were well above USDA's forecast of 18.2 million bu. Top destinations included Japan, the Philippines, South Africa, Indonesia and Mexico. A modest amount of cancellations were also reported from unknown destinations and Colombia.

Drought conditions are expanding into Kansas, and 20% of the top wheat-producing state now are affected. Seeding for the 2018 hard red winter wheat crop will commence next month.

Elsewhere around the world, Canada’s Statscan report estimated that Canada’s wheat harvest will come in at 936.9 million bu., which would be the country’s lowest since 2011. In the U.K., government data indicated that the country’s wheat stocks are down 48% from a year ago, at 51.1 million bu.

Preliminary volume estimates were 112,760 bu., up moderately from Wednesday.

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