“The antiquity & general acceptance of an opinion is not assurance of its truth.”
– Pierre Bayle (French philosopher)
At 6:55 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3358 CAD, $1 CAD = $0.7486 USD)
July Corn: unchanged at $3.733 USD or $4.986 CAD
July Soybeans: -4¢ (-0.4%) to $9.598 USD or $12.821 CAD
July Soybean Meal (per short ton): -$0.70 (-0.2%) to $317 USD or $423.46 CAD
July Soybean Oil (cents per lbs): -0.23¢ (-0.7%) to 31.80¢ USD or 42.48¢ CAD
July Oats: +1.3¢ (+0.55%) to $2.198 USD or $2.935 CAD
July Wheat (Chicago): +1¢ (+0.25%) to $4.368 USD or $5.834 CAD
July Wheat (Kansas City): +2.3¢ (+0.5%) to $4.313 USD or $5.761 CAD
July Wheat (Minneapolis): +0.8¢ (+0.15%) to $5.383 USD or $7.19 CAD
July Canola: -3.6¢/bu / -$1.60/MT (-0.3%) to $8.569/bu / $377.82/MT USD or $11.446/bu / $504.70/MT CAD
Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.249 USD or $3.005 CAD
July Milling Wheat: unchanged at $4.666 USD or $6.232 CAD
Grain markets are mixed this morning with planting pace and weather market dictating price directions (for likely the next 5-6 weeks). The pace of seeding will likely continue to be slowed with more rain in the 7-day forecast for most areas across North America. Canola values continue to see a nice bounce on the old crop side as the market continues to weigh current available stocks against expected 2017/18 output. There are some opinions out there that the market doesn’t care about seeding until May 1st but given the amount fo speculative dollars in the commodity game right now, I find it very hard to think there’s traders in NYC and elsewhere who understand the ins and outs of seeding (and can price risk accordingly). Overall, this is what a market is: varying opinions of why prices can go up and why prices can go down. We will never be able to 100% correctly predict the direction of the market but we can weigh upside potential versus downside risk (as I talked about a few months ago in another blog post).
Yesterday the N.O.P.A. crush numbers for March came out at a little over 153M bushels of soybeans used, 2.4% below pre-report market guesstimates of 156.7M bushels and March 2016’s use of the exact same number (literally). As per AgResrouce, Brazilian soybean farmers are waiting for a currency or CBOT-driven rally to make even more sales as prices in domestic Real currency terms are near breakeven. It’s estimated that 87% of the Brazilian soybean crop has now been harvested, with basically 100% of the fields in Mato Grosso now combined. However, it’s also suggested that only 63% of the Mato Grosso soybean crop has been sold (versus 70% a year ago). While the bulls will continue to point to delayed planting and precipitation concerns in Argentina, we continue to think that the downside risk is very real and we’re not the only ones thinking this way.
Available spot and early summer movement prices are sure to influence what goes into the ground as well and the little bit of improvement we’ve seen on canola basis is supporting the ideas of a large canola crop. On the flipside, seeing bids below 20 cents CAD / lbs for canaryseed isn’t helping conversations with the banker but there’s a significant divide between what StatsCan thinks the carryout will be (5,000 MT) and the private market thinks (75,000 MT). Looking ahead into the pulses, AgCanada is pegging Canadian lentil production at 3.1M tonnes (-4.6% from last year’s 3.25M-tonne crop), while they expect Canadian peas production to drop 12% year-over-year to 4.25M tonnes. A.A.F.C. raised their total Canadian wheat stocks estimate to 7.3M tonnes, which is partially why you’ll see significantly less Canadian acres this spring go into wheat, especially durum (which, aside from weather and disease risk, will influence prices). Conversely, across the pond, Strategie Grains thinks that the European Union will hold only 10.1M tonnes of wheat at the end of this marketing year, down 37% year-over-year. Thus, after a smaller 2016/17 crop, decent demand, and a bit-more-drier-than-you’d-like start to the 2017/18 crop, Strategie is feeling a bit more bullish on the cereal.
Today’s crop progress report out from the U.S.D.A. showed us that the U.S. winter wheat crop is developing earlier than usual with 19% of the crop headed out versus 11% a year ago and the 5-year average of 13%. As such, the portion of the crop rated good-to-excellent was raised by 1 point to 54% (57% a year ago). Spring crop planting is falling behind though with only 13% of the U.S. spring wheat crop in the ground (21% average, 25% last year), 13% of barley acres seeded (37% last year and the 5-year average), and 45% of oats have been drilled (53% last year, 52% average). 6% of the U.S. corn crop is now planted, up 3 points from last week but below the 5-year average of 9% and well below last year’s torrid pace of 12%. The slightly-behind-schedule pace is expected to creep into Western Canada as well, given some of the wet conditions & remaining field work. That being said, opinions on what StatsCan will show in Friday’s acreage estimates report are quite varied (more on this later on Thursday).
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.