“Number one, cash is king… number two, communicate… number three, buy or bury the competition.”
– Jack Welch (Former GE CEO)
At 6:45 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3548 CAD, $1 CAD = $0.7381 USD)
July Corn: +1.3¢ (+0.35%) to $3.68 USD or $4.986 CAD
July Soybeans: -0.5¢ (-0.05%) to $9.56 USD or $12.952 CAD
July Soybean Meal (per short ton): +$0.50 (+0.15%) to $314.20 USD or $425.69 CAD
July Soybean Oil (cents per lbs): -0.06¢ (-0.2%) to 32.10¢ USD or 43.49¢ CAD
July Oats: unchanged at $2.198 USD or $2.977 CAD
July Wheat (Chicago): +2.3¢ (+0.55%) to $4.288 USD or $5.809 CAD
July Wheat (Kansas City): +2.5¢ (+0.6%) to $4.278 USD or $5.795 CAD
July Wheat (Minneapolis): +4.3¢ (+0.75%) to $5.55 USD or $7.519 CAD
July Canola: -0.7¢/bu / -$0.30/MT (-0.05%) to $8.726/bu / $384.77/MT USD or $11.823/bu / $521.30/MT CAD
Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.218 USD or $3.005 CAD
July Milling Wheat: +13.6¢ (+2.15%) to $4.801 USD or $6.505 CAD
Checking Out Competition
Grain markets this morning are mixed with wheat finding a strong start on weather concerns while oilseeds are struggling to keep up with oil prices dipping below $50 USD / barrel on bigger stocks. Corn and wheat continue to be supported by concerns of the pace of planting this spring, but a few weather forecasters say the rain will continue to be patchy, meaning that there’ll be plenty of dry days to get in & move through some dirt in the Midwest! It’s a bit of a different story in the U.S. Northern Plains and Western Canada as below-average temperatures and moisture systems will continue to delay Plant 2017 going at full speed. While it hasn’t fully been digested and priced out by the market, it was initially rumoured that U.S. President Trump was considering backing out of NAFTA completely before backtracking later in the day, saying he’d rather re-negotiate. Hopefully The Donald understands that Mexico & Canada aren’t necessarily the competition, especially if you asked multiple U.S. farm groups who are pushing back.
Next week we’ll see the start of the Kansas Wheat Quality Tour, which will tour through major winter wheat production areas and at a time when temperatures are likely to drop close to or below freezing. If it were drop any more than that, you could expect a pop, and this is part of the reason that some analysts are feeling a bit more optimistic about prices after they’ve been languishing for the past few years. Similar concerns are being voiced for rapeseed crops in Western Europe, which are blooming but facing some freezing temperatures. Western Europe has been fairly dry but it appears that some rains are on the way, and it couldn’t come sooner as 57% of the French corn crop has been seeded as of last week, compared to just 9% in last year’s wet growing season. This hasn’t necessarily been a bullish catalyst yet for canola as Canadian production and carryout concerns continue to be the main focus of the market.
According to the Russian Ag Ministry wheat exports out of the country thus far in the 2016/17 marketing year are sitting at nearly 6% ahead of where they were a year ago at 23M tonnes. However, the U.S.D.A. has a total-year forecast of 28M tonnes, which would be nearly a 22% boost year-over-year, meaning Russian shipments have to substantially increase to hit their target (but it doesn’t look like they will). Apart of from slow buying from Egypt at the beginning of the marketing year due to a bunk ergot policy, the Russian Rouble as appreciated, which in turn has put downward pressure on domestic prices, enough so that farmers have locked their bin doors. Next door in Ukraine, 4.54M tonnes of grain were shipped out in March (a 52% jump from the 3M tonnes exported in February), including 3.1M tonnes of corn and 1.05M tonnes of wheat. Another notable datapoint is that Ukraine has exported 334,000 MT of peas this marketing year so far, almost double what they did in 2015/16.
Staying in the pulses, our friend Chuck Penner at LeftField Commodities points out that despite prices sliding a bit, Canadian lentils exports haven’t really slowed down. That being said, although acreage is down in the Great White North, American lentil acreage will be a record this year, Australia area is likely to be up again, and places like Kazakhstan are looking at planting more. Ultimately, there is still some attractive R.O.I. opportunities in the lentils / peas markets, and the demand is relatively justifying the production. On the other side of the world, just over 8M tonnes of soybeans have been shipped out in April, with another 3M tonnes expected to get loaded & sail out before Monday. If it’s realized, this would be a 33% jump year-over-year for 11M tonnes and the largest monthly export number ever for Brazilian soybeans. AgResource points out that with the significant improvements in Brazilian transportation infrastructure, within one week, a Chinese buyer can secure a boat and immediately start loading, which would put it on par with U.S. port logistics. The competition is real.
COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.