GRAIN MARKETS: Harvest pressure leans hard on soybeans

Wheat prices rise modestly while corn prices tread water.

By Ben Potter

The U.S. soybean crop is big. Just how big is still up for debate, but traders are feeling bearish as harvest progresses, handing soybeans a double-digit loss to start the week. Meanwhile, corn prices held on for little or no gains, and wheat prices found some relief via short covering.

Above-average temperatures continue across the Midwest, but some relief (or, at least, a rebound to more seasonal weather) is expected starting midweek. Tuesday should bring widespread rainfall from Texas all the way up into Minnesota and Wisconsin. Areas of west Texas, northern Oklahoma and south central Kansas are expected to receive the heaviest amounts of rainfall. In the Atlantic Ocean, Hurricane Maria has weakened to a Category 1 storm and is not expected to make U.S. landfall, but winds and rain from the outer reaches of the storm could brush up against the Carolinas.

Wall Street had many news items vying for its attention Monday – some good, and some bad. On the bearish side, sharp rhetoric from the U.S. aimed at North Korea has been interpreted by that country as a declaration of war. Financial markets soured on that news, despite the Trump Administration pushing ahead with its tax plan and saying the President will discuss additional details on Wednesday. The Dow dropped 65 points to 22,234 in mid-afternoon trading.

Corn prices started the day down but fought back just barely above the waterline, with December 2017 prices picking up a 0.25 cents to close at $3.5375/bu. and March 2018 prices adding 0.5 cents to close at $3.6650.

Ahead of Monday afternoon’s the U.S. Department of Agriculture "Crop Progress" report, a survey of nine analysts concluded that corn ratings should remain unchanged at 61% good to excellent. The corn harvest is expected to make significant progress this week, with the same survey predicting that USDA will mark 14% of this year’s corn crop as harvested. Above-average temperatures throughout September may have helped the corn crop "catch up" after lagging behind average harvest pace the past two weeks. 

USDA corn export inspections totaled 29.1 million bushels, up from last week’s total of 27.1 million bushels. Even so, the total came on the low end of the average trade guess (27-35 million bushels) and was well below numbers from a year ago, with 53.5 million bushels.

The 2017-18 marketing year is young, but corn export sales inspections are already considerably behind a year ago, with 83 million bushels total so far this year, versus 169 million bushels a year ago. 

Preliminary volume estimates were well below Friday’s total of 178,653 contracts – down to 112,618.

Soybean prices lost most of last Friday’s strong gains, as harvest pressure continues to weigh heavily on what is expected to be a large U.S. crop – perhaps even the second-largest on record. November 2017 prices lost 13 cents on the day, closing at $9.7125, while January 2018 futures dropped 12.75 points to finish at $9.8175.

No large export sales were reported on Monday – something that had become a bit of a steady routine, with 12 such sales reported so far in September.

Ahead of Monday afternoon’s USDA Crop Progress report, a survey of nine analysts suggest that soybean ratings will come in unchanged, with 59% of the crop rated good to excellent. The analysts also anticipate soybean harvest has progressed to 12% complete – up from 4% last week and slightly ahead of 2016.

Soybean export inspections totaled 37.9 million bushels, up from last week’s total of 34.2 million bushels. Like corn, volume came in on the low end of the average trade guess of 36-47 million bushels. Even so, year-to-date volume is ahead of last year, with 113 million bushels versus 85 million bushels in 2016. As noted in last week’s recap, sales typically decline through September before picking up sharply from October through December.

Preliminary volume estimates were moderately lower from Friday’s totals, with 167,259 contracts. 

Wheat prices saw modest gains for winter wheat and significant gains for spring wheat. December prices for Chicago SRW rose 4.5 cents to close at $4.54, and December prices for Kansas City HRW were up 3.25 cents to close at $4.5350. December futures of MGEX Spring Wheat jumped 2.2% - 14 points – to close at $6.4775. 

Ahead of Monday afternoon’s USDA Crop Progress report, a group of nine analysts estimate that 25% of the U.S. winter wheat crop has now been planted – up from 13% a week ago, and slightly behind 2016’s pace of 30%. 

USDA wheat export inspections edged above last week’s totals, with 18.4 million bushels for the week ending September 21, compared with 17.2 million bushels a week prior. Unlike corn and soybeans, wheat export inspections landed on the high end of the average trade guess, which was 12-20 million bushels. It’s also nearly half the volume from this week a year ago (33.1 million bushels). Total year-to-date inspections continue to lag behind 2016 totals, with 339 million bushels so far this year versus 348 million bushels last year.

Preliminary volume estimates were down slightly from Friday’s totals of 85,928 contracts, with 82,100.

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