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January 26: Wheat Prices Rally Friday

It was a big day again for wheat prices thanks to a strong export report from the USDA Friday. Meanwhile, soybean prices slipped back on weaker export data.

Trading in Chicago today faced the backdrop over the increased confusion about the Trump Administration’s policy on the U.S. dollar.

Earlier this week, Treasury Secretary Steven Mnuchin said that the United States was open for business and hinted that the administration welcomed a weaker dollar to make exports more competitive.

However, President Trump said Mnuchin’s statements were misunderstood and said the U.S. dollar would get stronger and stronger.

Given the role of the dollar in global trade, commodity prices have fluctuated due to the mixed tones of the administration.

Meanwhile, grain markets largely ignored a report by the U.S. Commerce Department this morning stating that U.S. GDP growth came in at 2.6% for the 4th quarter.

That number was below the 3.0% figure that analysts forecasted ahead of the report.

Here’s what else you need to know from the Chicago Board of Trade.

Wheat Prices Pop Friday

Today’s USDA report indicated stronger than expected wheat exports for the week.

The USDA said that exports came in at 427,239 metric tonnes for the week ending January 18. The figure was toward the top end of trade estimates.

In Chicago, March SRW prices popped 6.5 cents to close the day at $4.41. The May contract added 6.5 cents and finished just under $4.54.

In Kansas City, the March HRW contract popped 8 cents to close at $4.43. The 8.25-cent gain for the May contract pushed its price to just under $4.58.

As our friends at AgChieve explain in the chart below, HRW wheat prices are hovering near a seven-week high.

kansas-winter-wheat-prices-downtrend

In Minneapolis, spring wheat prices also saw some support. The March contract added 4.25 cents to close the day at $6.145. The May 2018 MGEX contract added 3.5 cents and closed at $6.24.

Today’s surprisingly bullish news came out of Europe. Today, the European Commission slashed its own production estimates for wheat in 2017/18 from 142.0 MT to 141.5 MT. They also reduced their export forecast by about 506,000 MT.

Corn Prices Gain on Export News

Today, March corn contracts added 1.25 cents to close the day at $3.565. The May contract added 1.25 cents to finish at $3.65.

The small uptick came from stronger than expected. FAS said that total corn exports for the week ending January 18 came in at 1.44 million metric tonnes.

That figure topped the high-end estimate of 1.25 MMT from analysts heading into the report.

While that number was off about 24% from the previous week’s report, it still topped last year’s weekly figure by 5.5%.

We saw two major developments on the global corn market that helped offer support today as well.

First up, trade analysts in South Africa believe that drought conditions in the country are going to sharply reduce total acreage for both white corn and yellow corn. The estimate is about an 18% decline to 5.3 million acres.

The other news came out of the Argentine Ag Ministry. The group reported that 2017/18 corn acreage would be about 250,000 acres smaller than their previous estimate. Total acres are set for 21.5 million.

Soybean Prices Drop on Profit Taking 

Finally, soybean prices slumped after a red-hot week. March prices retreated 6.75 cents to close the day at $9.855. The May contract also shed 6.75 cents and closed the day under $10.00. Despite today’s drop, it’s been a great two-week run for soybeans.

We noted just two days ago that our GrainCents readers should take some profits by selling some of their grain. The timing was impeccable, as we were able to get in ahead of today’s profit-taking by the broader market.

For more insight on how you can get the most money for your grain, learn more about our price recommendations and analysis of 12 different crop categories in GrainCents, right here.

Today’s selloff also accompanied weaker than expected export sales.

The agency said that old crop exports came in at 616,272 MT. That figure was half of the reported figure from the previous week. That said, it’s still more than 14% higher than exports from the same week in 2017.

U.S. Crude Oil Prices Hit Three-Year High

Crude oil prices pushed to new highs thanks to statements by President Trump and weakness in the U.S. dollar. WTI crude oil price today added 1.1% and hit a three-year high.

Meanwhile Brent crude added 0.1%.

While Trump’s Davos speech will continue to attract attention all day, investors can’t sleep on developments in Venezuela.

The country’s economic collapse is raising serious concerns about the global oil market and can create series trade and geopolitical problems for South America.

Speaking of South America, we’ll be diving deeper into new insight on production numbers out of Argentina and Brazil next week.

Be sure to sign up for the Breakfast Brief each morning, and start making your grain marketing more profitable.

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