Apr 25 – Thinking About Delays

“One day’s delay is another day’s lack of progress.”
– Stuart Bowen (US Inspector General)


Good Morning!

At 6:35 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3556 CAD, $1 CAD = $0.7377 USD)

July Corn: -1.3¢ (-0.35%) to $3.643 USD or $4.938 CAD
July Soybeans: -3.8¢ (-0.4%) to $9.68 USD or $13.122 CAD
July Soybean Meal (per short ton): -$0.60 (-0.2%) to $320 USD or $433.78 CAD
July Soybean Oil (cents per lbs): -0.22¢ (-0.7%) to 31.71¢ USD or 42.99¢ CAD  
July Oats: +0.3¢ (+0.1%) to $2.18 USD or $2.955 CAD
July Wheat (Chicago): -1¢ (-0.25%) to $4.183 USD or $5.67 CAD
July Wheat (Kansas City): +1¢ (+0.25%) to $4.153 USD or $5.629 CAD
July Wheat (Minneapolis): +1.5¢ (+0.3%) to $5.33 USD or $7.225 CAD
July Canola: -2.3¢/bu / -$1/MT (-0.2%) to $8.749/bu / $385.74/MT USD or $11.859/bu / $522.90/MT CAD

Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.216 USD or $3.005 CAD
July Milling Wheat: -2.7¢ (-0.45%) to$4.598 USD or $6.232 CAD

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Thinking About Delays

Grain markets this morning are mostly in the red as a speedy planting pace in America has got the bears grabbing control of things again (at least for now). Plant 2017 should slow this week with some rains but what’s not slowing down is the pace of U.S. soybean exports at a time when purchases start to slow as South American supply starts to take over. More specifically, thanks to the U.S. Dollar recently dropping to 5-month lows, there’s buzz that American soybeans are getting competitive with Brazilian options for June and July sailings. While China continues to be the major player in the soybean export, they also hold considerable sway in palm oil markets. In March, the People’s Republic shipped in just 377,455 MT of the vegetable oil, down nearly 8% from March 2016. This data point has put a bit of pressure on canola, but the main story in that oilseed is 2016/17 carryout concerns and delays in the start to Plant 2017 in Canada (and the Canadian Loonie dipping below 74 cents this morning).

Yesterday’s U.S.D.A. crop progress report showed us that American farmers planted 11% of the total corn crop in the past week (or about 10M acres), taking total completion to 17%, only 1 point behind the 5-year average. While the majority of the progress has been in the Delta states (i.e. Mississippi, Louisiana), the highlights of the week were in Missouri and Illinois where 28% and 29% of the crop got planted in the past week for total seeded acres at 46% and 34% each. For soybeans, 6% of the North American crop has now been planted with the Delta states again accounting for almost 100% of the number. In the cereals, things continue to drag behind last year and the season average as just 57% of the U.S. oats crop is in the ground (69% a year ago, 62% 5-year average), 27% of the American barley crop has been seeded (43%, 40%), and 22% of all spring wheat acres have been drilled (44%, 34%). Conversely, the U.S. winter wheat crop continues to benefit from rains, keep the good-to-excellent portion at 54% (unchanged from a week ago, 5 points behind the 59% this time a year ago).

Those rains should return today to most of the Midwest but it pales in comparison to the snow that’s been falling in the Canadian Prairies and parts of the U.S. northern states (namely Minnesota and North Dakota). Where there is concern about rain is in the parts of western Europe, but it’s with respect to the lack of precipitation that is getting the market a bit antsy. FranceAgrimer recently downgraded the wheat crop rating in the country to 85%, down 4 points from a week ago and with the dry weather should only continue for another week before seeing some drops on the windshield sometime next week (This is where I remind you that wheat is a weed and can handle some pretty dry conditions and that last year’s smaller European wheat crop was caused by excessive rains and mainly in France). While the European crop heads into the thick of its growing season, the Egyptian Minister of Supply reminded the market that they have about 2.6 months-worth of wheat in reserves as they plan to buy 3.8M tonnes from local farmers over the next 6 months (European ships likely will start arriving in August).

Who is also getting into the buying is livestock producers looking for some summer coverage before new crop supplies start trickling in. We’ve mentioned more than a few times in the past that the market is unlikely to see a significant bump in the seasonal swing like it has in years past because of available supplies, but we do expect higher than the lows we’ve been at (post the grain you’d like to move this summer today!). Expecting more than a 5% bump would likely only be related to significant weather issues but market analysts continue to point to more upside in corn than soybeans at this time. The third driver of different prices may be the renegotiation of N.A.F.T.A. and other key trade agreements (Canada, Mexico, & China account for 44% of all American ag exports). President Trump has already this morning changed the game in the wood industry, imposing stiff tariffs of up to 24% on Canadian lumber shipped to the United States (hence, the drop in the value of the Canadian Dollar this morning). While The Donald continues to hurdle trade challenges (as mentioned yesterday), the American farmer can be relieved that a new Secretary of Ag has finally been confirmed. After 101 days of delay, former Georgia Governor Sonny Perdue got confirmed yesterday (and just in time to meet the farmers President Trump is inviting to the White House!)

To growth,

Brennan Turner
President/CEO | FarmLead
1-855-332-7653 (Toll-Free)
www.FarmLead.com
@FarmLead (on Twitter)

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.

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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