Apr. 24 – Rally Hats?

 fl_hubspot_logo_456x57.pngFarmLead Breakfast Brief 
Monday, April 24th, 2017

“With experience also comes the understanding that you have to beat the rally before you can beat the competition.”
– Robby Gordon (US race car driver)

Good Morning!

At 7:05 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3417 CAD, $1 CAD = $0.7453 USD)

July Corn: +1.8¢ (+0.5%) to $3.655 USD or $4.904 CAD
July Soybeans: +7.3¢ (+0.75%) to $9.68 USD or $12.988 CAD
July Soybean Meal (per short ton): +$1.90 (+0.6%) to $315.50 USD or $423.32 CAD
July Soybean Oil (cents per lbs): +0.26¢ (+0.8%) to 32.42¢ USD or 43.50¢ CAD  
July Oats: -0.3¢ (-0.1%) to $2.16 USD or $2.898 CAD
July Wheat (Chicago): +3.3¢ (+0.75%) to $4.243 USD or $5.692 CAD
July Wheat (Kansas City): +3¢ (+0.7%) to $4.203 USD or $5.639 CAD
July Wheat (Minneapolis): +0.8¢ (+0.15%) to $5.363 USD or $7.195 CAD
July Canola: +7¢/bu / +$3.10/MT (+0.6%) to $8.842/bu / $389.87/MT USD or $11.864 bu / $523.10/MT CAD

Friday’s Winnipeg ICE Close
July Barley: unchanged at $2.241USD or $2.983 CAD
July Milling Wheat: -8.2¢ (-1.3%) to $4.665 USD or $6.26 CAD

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Rally Hats?

Grain markets are mostly in the green as we head into the last week of April with weather markets running the show while geopolitical risk is playing a close second fiddle. A lower U.S. Dollar this morning is also supporting grain markets, thanks to the first phase of France’s 2-vote election is through with the more liberal, pro-EU Emmanuel Macron earning 23.8% of the vote with far-right, nationalist leader Marine Le Pen not far behind 21.7%. Now, the 2 candidates will go to a vote-off on May 7th. On the weather front, rain is expected to hit most of the Midwest mid-week after a bit of drier weekend but as pointed out by Mike Verdin at Agrimoney, there is a sizeable short position owned by managed money right now. More specifically, hedge funds increased their net short position in corn last week to almost 172,000 (nearly 13,400 short lots added), added almost 16,100 shot positions to soybeans and nearly 7,700 more short contracts in wheat. Given the high level of shorts positions in the market, one can safely say that some of the rally action this morning is due to short-covering.

Digging into Friday’s StatsCan report a little deeper, the biggest surprise is in Alberta where there are 1.125M more acres getting planted this year than last year, with main notable being spring wheat area climbing 860,000 acres or 16% year-over-year to 6.2 million acres. The record 22.4M canola acres are being made completely by Alberta and Saskatchewan, putting in 870,000 and 1.175 million more acres respectively than they did in 2016 for 12.275 million in Saskatchewan and 6.82 million acres in Alberta total. Conversely, Manitoba canola acres are down a bit year-over-year to 3.1 million but soybean and corn acres are up, notably up by 565,000 in beans to an astounding 2.2 million acres (food for thought: in 2012, Manitoba soybean acres were 800,000). Combine this with Saskatchewan’s similarly-significant hike to 730,000 acres of soybeans, and over 4 million acres of the oilseed getting planted between Quebec and Ontario, there will be nearly 7 million acres of soybeans will get planted in Canada this spring.

The canola market continues to enjoy highs only seen twice in the past 6 months (late November & late February), this go-around being helped by Plant 2017 speed concerns in Western Canada and the Canadian Dollar being tripped up by lower-than-expected inflation. While the Loonie has bounced back a bit this morning from its Friday lows, also putting pressure on the gold coin is U.S. Donald President who has pushed some button’s on Canada’s dairy industry and its supply management process. More specifically, Shaun Haney of Real Agriculture reminds us that Canada has now joined the likes of Germany, France, China, and obviously Mexico as trade targets that The Donald is going to go after. Ultimately, there continues to be more questions than answers for trade in the long-term. These include, what is Canada doing for another pulse import exemption with India, can the U.S. get a trade deal done with Japan, and where does the EU sit in priority for the White House against the likes of China and the aforementioned Japanese. Ultimately, it’s tough to predict some long-term macro trends with Trump sending “trade tweets” out from the Oval Office and so the market continues to focus on weather issues in the near-term to get some rallies going.

To growth,

Brennan Turner
President/CEO | FarmLead
1-855-332-7653 (Toll-Free)
@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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