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GRAIN MARKETS: Grain gains spill into Friday markets

Prices build on bullish yield and export news to end the week.

By Ben Potter

Thursday was a good day for most grain prices – especially soybeans, which saw prices rise by more than 26 cents. That positive sentiment spilled into Friday, bolstered by additional positive export news. Soybeans, corn, winter wheat and spring wheat all finished higher Friday. Soybeans led the charge, adding another 8.25 cents and landing back over $10 per bushel for the first time since July.

Rains across large areas of the Plains and Midwest over the past week have made a positive impact, according to the latest U.S. Drought Monitor updates. Drought removal occurred in several Midwest states, including Iowa, Illinois, Missouri, Kansas and Nebraska. Additional rains through October 16 could cause further drought removal “from the Midwest into northern Maine,” according to NOAA meteorologists. But looking further out, through October 21, the odds are in favor of below-normal precipitation in the Great Plains, Ohio Valley and central Great Lakes regions, among other areas.

On the national stage, President Donald Trump has accused Iran of “not living up to the spirit” of its 2015 nuclear agreement and told Congress it had 60 days to decide on reinstating economic sanctions that were eliminated under that agreement. The deal would effectively be terminated if that happens. Meantime, consumer prices made the biggest jump in eight months on the back of higher gasoline prices. Gas prices have eased somewhat since late September but took strong gains of more than 2% on Friday. Crude oil prices, which has been hovering above and below $50 per barrel, is back slightly above that line. The U.S. dollar has been weakening in October but was also up slightly on Friday.

Corn prices benefited from positive export news and a sluggish U.S. harvest, with December prices clearing back above the $3.50 mark to close at $3.5275. March 2018 futures gained 3.75 cents to close at $3.6650.

Corn export sales came in well ahead of last week’s volume (32.1 million bushels) and trade estimates (37.4 million bushels), tallying up 62.7 million bushels of old crop sales and 0.6 million bushels of new crop sales. Three-fourths of the net sales are for Mexico, with other top destinations that included Japan, Colombia, Peru, South Korea and unknown destinations. 

Corn export shipments slowed from the week prior, with 26.4 million bushels. Primary destinations included Mexico (13.7 million bushels), Colombia (3.3 million bushels), South Korea (2.7 million bushels), Panama (1.7 million bushels) and Guatemala (1.6 million bushels).

South Korea has purchased 2.4 million bushels of corn “thought likely to be sourced” from the U.S. in a tender that closed Friday. The corn will be delivered on or around January 25, 2018.

Corn speculators have added another 19,743 contracts to their net short position, for a total of 190,296. 

Russia is nearly half finished with its corn harvest, at 44.6%. Yields so far have averaged 75 bpa vs. 86 bpa on the same date last year.

Preliminary volume estimates were for 219,781 contracts, down from Thursday’s haul of 496,495.

Soybean prices continued to find lift from Thursday’s bullish yield estimates, revised downward by 0.4 bpa by USDA. Sprinkle in a slower-than-average U.S. harvest and some building concerns about the 2017/18 Brazilian crop, and it was a recipe for another day of solid gains. November prices crested and stayed over $10 per bushel for the first time since July, ending the day up 8.25 cents to $10.0025. January 2018 futures were up 7.75 cents to close at $10.1025.

Soybeans posted 64.2 million bushels in old crop sales for the week ending October 5. That was nearly double the volume from the week prior (37.3 million bushels), not to mention trade estimates (38.6 million bushels).

Export shipments totaled 43.7 million bushels, up from 36.2 million bushels the week prior. About two-thirds of that volume headed to China (25.7 million bushels), with other top destinations that included Mexico (4.3 million bushels), the Netherlands (3.8 million bushels), Indonesia (3.1 million bushels) and Pakistan (2.6 million bushels).

Soybean speculators have cut their short position down another 6,489 contracts to 9,108 total.

China imported another 297.6 million bushels of soybeans in September, bringing the yearly total for 2016/17 (October through September) to a record 3.435 billion bushels. Its September 2017 imports were nearly 13% higher than a year ago. China is the world’s No. 1 soybean importer.

Preliminary volume estimates were still hot, at 372,474 contracts, but cooled from Thursday’s volume of more than 500,000.

Wheat prices found a boost from technical buying and short covering following six-week lows posted earlier this week. Continued news of large global stocks and sluggish U.S. wheat exports doesn’t lend extensive rally support, however. Still, December Chicago SRW prices picked up 9 cents on Friday to close at $4.3950, and December Kansas City HRW prices added 9.75 cents to close at $4.58. MGEX Spring Wheat futures were also up, with December prices gaining 3.75 cents to close at $6.1375.

After two weeks of consecutive volume gains, wheat export sales lost some momentum, slipping to just 6.4 million bushels of old crop sales. That’s well behind last week’s tally of 18.1 million bushels and trade estimates of 14.7 million bushels.

Export shipments were also lackluster, at 12.1 million bushels, down 55% from a week ago and 65% lower than the four-week average. Primary destinations included Japan (3.5 million bushels), the Philippines (1.7 million bushels), Indonesia (1.4 million bushels), Nigeria (1.3 million bushels) and Mexico (1.2 million bushels). 

Wheat speculators have increased their net short position by another 3,834 contracts to 90,513 total.

Russia has nearly completed its 2016/17 wheat and barley harvest. Wheat harvest is currently 96.8% complete and barley is 96% complete. Winter grains for 2017/18 are also 88.9% planted in Russia.

Preliminary volume estimates were down from yesterday’s total of 117,766 contracts, with 75,581.

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