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GRAIN MARKETS: Why wheat was Wednesday’s winner

Wheat grabbed big gains, while corn and soybeans made much smaller adjustments.

By Ben Potter

Dry forecasts in the U.S. Plains was enough to shake up Wednesday’s winter wheat prices, which rose by as much as 3% or more during the session. Corn and soybean prices made much smaller adjustments, positioning prices ahead of Thursday’s USDA export reports.

Now that one winter storm system has blown through the Midwest and is currently dumping snow in the Northeast, another one will bring a band of additional accumulation to Rockies, Plains, Midwest and Great Lakes this weekend. Expect 8” or more in areas such as central Iowa and northern Illinois starting Friday.

Wall Street fights for lower volatility after Monday’s massive losses. The Dow bounced back nearly 300 points in midmorning trading to push back over 25,000 points, but losing about a third of those gains by early afternoon. Energy prices continued to stumble, with crude oil prices down around $62.00 per barrel in late morning trading. Gasoline, diesel and natural gas prices were down around 2%, with gold and copper prices softening slightly.

After farm income saw a “mild rebound” in 2017, it’s set to drop again in 2018, according to USDA. Click here to read exclusive analysis from Farm Futures senior grain market analyst Bryce Knorr.

Corn prices edged higher on the anticipation of positive export data from USDA tomorrow. March prices rose 1.75 cents to $3.6525, and May prices gained 1.5 cents to $3.7275. March contracts are at their highest prices since late October.

Corn spot basis bids were mostly steady Wednesday, with two Midwestern locations moving 3-4 cents higher.

Trade estimates are out ahead of Thursday’s weekly export sales report from USDA, including corn export estimates that range between 51.2 million and 74.8 million bushels.

Industry analysts now predict the 2017/18 Brazil corn production will come in slightly higher, with 997.6 million bushels, compared to January estimates of 994.8 million bushels.

Taiwan has purchased about 2.2 million bushels of corn sourced from the U.S. in an international tender. The grain is set for shipment in April.

South Korea made no purchases in its tender for 6.5 million bushels of corn, which closed earlier Wednesday.

Kazakhstan’s grain exports are trending more than 28% higher year-over-year in its 2017/18 marketing year, which began July 1.

U.S. grain traveling on the nation’s railways continues to see slightly lower volume compared to 2017. Cumulative volume has reached 112,083 carloads this year, which is 5.8% below last year’s pace.

Preliminary volume estimates saw huge gains from Tuesday, climbing from 419,790 all the way to 979,567.

Soybean prices were hampered by relatively low trade export expectations, with the USDA releasing another round of data Thursday. March futures fell 3.25 cents to $9.83, while May futures fell 3.5 cents to $9.9450.

Soybean spot basis bids were mostly unchanged Wednesday, although one Ohio elevator did see prices move down 1 cent.

Trade estimates for USDA’s weekly export sales report, out Thursday, range between 14.7 million and 29.4 million bushels for soybeans.

A group of 11 analysts are predicting higher Brazil soybean yields than prior estimates in January. Currently, the group anticipates total production of 4.137 billion bushels, versus estimates of 4.049 billion bushels a month ago.

Preliminary volume estimates were for 314,118 contracts, up slightly from Tuesday’s final tally of 305,712.

Wheat prices trended sharply higher on both healthy export expectations and weather worries in the U.S. Plains. March Chicago SRW futures were up 14.25 cents to $4.6050, and March Kansas City HRW futures climbed 11.5 cents to $4.8050. MGEX Spring Wheat contracts captured more modest gains, with March futures adding 4 cents to close at $6.1375.

Trade estimates for USDA’s weekly export sales report, out Thursday, range between 7.3 million and 18.4 million bushels for wheat.

Ukraine’s 2017/18 grain exports are about 8% lower year-over-year so far. Since July 1, the country has exported 459.3 million bushels of wheat and another 318.9 million bushels of corn.

France saw its largest volume of soft wheat exports outside of the EU in December, when the country exported 29.1 million bushels. Major markets included Morocco, Saudi Arabia and Algeria.

Japan plans to import nearly 1.8 million bushels of feed wheat in a so-called “buy and sell auction” that allows importers to name origin, price and grain quality.

China sold 435,000 bushels of its 2013 wheat reserves, which was just 1.22% of the total amount available for sale.

Preliminary volume estimates were for 222,122 contracts, a 66% boost from Tuesday’s final count of 133,542.

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