GRAIN MARKETS: Strong soybean sales anchor grain market gains

Markets see some relief after massive soybean export sale.

By Ben Potter

The grain markets have seen their fair share of red throughout the summer as prices struggle to make gains, but Wednesday saw some relief, anchored, in part, by a massive soybean export sale – one of the largest on record, in fact.

Fall arrives this Friday amid a Midwestern heat wave. Those hoping for more seasonal temperatures will have to wait a week or more for some respite. Looking further out, the temperature forecast for October through December could also trend warmer than normal. The probability of higher-than-normal temperatures is greatest in the desert Southwest, but the entire contiguous U.S. has an elevated chance of warmer temperatures during this period. Only Texas, New Mexico, Oklahoma and Kansas are expected to see wetter-than-normal conditions from October through December.

The Federal Reserve Bank decided not to raise interest rates today but said there could still be one more increase by the end of the year. The Fed also announced that it will begin unloading a small portion of the $4.5 trillion in investments it had accumulated in its strategy to minimize the 2008 financial crisis. In the meantime, current unemployment forecasts remain mostly steady – expected to fall from 4.3% now to 4.1% in 2018 and hold steady through 2019. The Dow was down four points in early afternoon trading.

Corn prices went along with the crowd today as broad commodity price gains were seen across the board. With no additional major weather disruptions currently in the forecast, traders will watch as harvest (which is currently only 7% completed) progresses. December futures rose 1.75 cents to close at $3.50/bu., and March 2018 futures also added 1.75 cents to close at $3.6250. 

Daily ethanol production continues to ease off its near-record volume. In response, ending stocks have eased up slightly from a week ago. Stocks remain relatively low for 2017 but are higher than year-over-year levels.

Ahead of the U.S. Department of Agriculture’s weekly export sales report on Thursday, trade estimates for corn range from 27.6 million bu. to 39.4 million bu. That’s approximately what the trade anticipated a week ago, too, but the actual total came in at only 28.1 million bu.

Preliminary volume estimates were for 153,495 contracts, down moderately from 216,215 on Tuesday.

Soybean prices continue to lift on positive export sales news, as large sales have been reported in eight out of the past nine business days. November futures were up 4.5 cents to close at $9.70/bu., and March 2018 futures were also up 4.5 cents to close at $9.8050.

Private exporters reported two large sales to USDA on Wednesday: one to China, and one to unknown destinations. The one to unknown destinations tipped the scales at 37.9 million bu., making it one of the largest ten sales on record since USDA began tracking them in 1977. About 90% will be delivered for 2017-18, with the remaining 10% delivered in 2018-19. The other sale, to China, was for 4.8 million bu. for delivery during the 2017-18 marketing year, which began Sept. 1.

Trade estimates ahead of Thursday’s USDA export sales report range from 44.0 million bu. to 55.1 million bu. That’s moderately higher than estimates from last week.

Preliminary volume estimates were for 113,044 contracts, down from Tuesday’s tally of 138,625.

Wheat prices got a modest boost Wednesday from technical buying, short covering and continued adverse weather news from down under, where dry conditions in Australia could cut production by as much as 10% for 2017-18. Chicago, Ill., December soft red winter wheat prices were up 6.75 cents to close at $4.4975/bu. Kansas City, Mo., December prices for hard red winter wheat were up 6.5 cents to close at $4.4850, while Minneapolis, Minn., spring wheat December prices climbed 4.25 cents to close at $6.2250.

Trade estimates ahead of Thursday’s USDA export sales report were for between 11.0 million and 18.1 million bu. That’s down slightly from last week’s estimates of 12.9-20.2 million bu.

Preliminary volume estimates were down from Tuesday’s total of 96,388 contracts, with 82,103.

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