“A young man without ambition is an old man waiting to be.”
– Steven Brust (American Author)
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 = $1.3319 CAD, $1 CAD = $0.7508 USD)
May Corn: +0.3¢ (-0.05%) to $3.668 USD or $4.885 CAD
May Soybeans: +6¢ (+0.65%) to $9.453 USD or $12.59 CAD
May Soybean Meal (per short ton): +$2.60 (+0.85%) to $311.90 USD or $415.42 CAD
May Soybean Oil (cents per lbs): +0.01¢ (+0.05%) to 31.08¢ USD or 41.40¢ CAD
May Oats: +3.8¢ (+1.7%) to $2.235 USD or $2.977 CAD
May Wheat (Chicago): -0.5¢ (-0.1%) to $4.328 USD or $5.764 CAD
May Wheat (Kansas City): -0.3¢ (-0.05%) to $4.295 USD or $5.721 CAD
May Wheat (Minneapolis): +4¢ (+0.75%) to $5.318 USD or $7.082 CAD
May Canola: -0.9¢/bu / -$0.40/MT (-0.1%) to $8.413/bu / $370.97/MT USD or $11.206/bu / $494.10/MT CAD
Yesterday’s Winnipeg ICE Close
May Barley: unchanged at $2.238 USD or $2.983 CAD
May Milling Wheat: +2.7¢ (+0.45%) to $4.618 USD or $6.151 CAD
Grains this morning are mostly in the green as the market focuses on North American planting conditions and rebounding after fading a bit yesterday following another bearish report in the form of the April W.A.S.D.E.. Global carryout for the 3 major row crops expanded their records further as corn inventories were increased to end the 2016/17 marketing year at 223M tonnes (+5.3% year-over-year), wheat stocks were raised to 252.3M tonnes (+4.4 YoY) and the soybeans carryout came in 3.5M tonnes above expectations at 87.4M (+13% YoY). Brokerage firm Stewart-Peterson thinks that corn could enjoy a nice spring / summer rally above $4 USD / bushel based on the reduction in U.S. corn acres and if poorer weather drops yields below trendline of 170. On the flipside, given the size of the soybean crop in South America and expected acreage in the U.S., long-time analyst Jerry Gulke thinks the bean market will “come home to roost” (AKA prices will pull back unfavourably) and it could happen as the North American crop is getting combined. If this were the case, the best marketing opportunities in the 2017/18 crop year wouldn’t be waiting for things to get into the bin, but during a spring, weather-driven rally.
Looking on the demand side, of things Mexico’s corn imports were raised by 1M tonnes to 27M tonnes in 2016/17 (a bit ironic given some of the talk about importing less from the U.S.) while China’s soybean imports were raised by 1M tonnes to 88M. Other than that, the U.S.D.A. failed to give us a better demand picture, meaning May’s report could be that much more important as we might see an update then, but also the first estimates of the 2017/18 crop! In the U.S., 2016/17 carryout was unchanged at 2.32 Billion bushels (nearly matching market expectations but 34% higher YoY) as ethanol use was expanded by 50M bushels but feed demand dropped by the same amount, keeping things even. American soybean ending stocks for this year were raised by 20M from last month to 445M bushels, which was near trade expectations but up 126% from 2015/16’s year end. On wheat, ending stocks came in higher than last month and above expectations at 1.16 Billion bushels (+19% YoY), mainly because feed use was dropped by 35M bushels.
Digging into the South American side of the report, the U.S.D.A. raised soybean production in Brazil & Argentina by a combined 3.5M tonnes from the March report to a record 167M tonnes. Specifically, Argentina’s bean crop was expanded by 500,000 MT from the March forecast to 56M tonnes, while Brazil’s crop was raised 3M to 111M tonnes (a record), which surpasses CONAB’s revised estimate of 110.2M tonnes! On the corn front, the Brazilian crop was raised by 2M tonnes to 93.5M tonnes (CONAB raised its call to 91.5M) while Argentina was pushed up by 1M to 38.5M tonnes. Corn exports between the 2 countries was raised by 1.5M tonnes to a combined 58M tonnes, whereas U.S. corn exports were left unchanged at 56.5M tonnes. Argentinian soybean exports were left unchanged at 9M tonnes but soymeal and oil exports fell by a combined 500,000 MT to 32M and 5.55M tonnes respectively. In Brazil, soybean exports were bumped up nearly 1M tonnes to 61.9M, making it the clear #1 exporter of the oilseed, well ahead of second-place America at 55.1M tonnes exported in 2016/17.
That being said, Brazilian farmers are apparently “hoping for a miracle” as they are holding back on further soybean sales. With domestic prices in Reals down about 30% from last June’s record highs, farmers across the country are hoping for a North American-weather driven rally, despite indications that prices in their country are likely to keep pulling back. AgRural is estimating that just 49% of the Brazilian crop has been sold by farmers (the lowest since 2009/10 and well below that 5-year average of 63%) while farmers in southern states are only at 27% sold! As per ag consultant Celeres, holding onto the crop and waiting for the rally has paid off for Brazilian farmers 4 times since 2009/10, compared to one “tie” (unchanged prices) and 2 losses (prices went down) but they aren’t expecting it to be a winning strategy this year because the cost of storage will eat into any gains. A similar train of thought could be applied any grains coming off this spring – it’s not worth holding onto things as there’s plenty of supply out there and instead of waiting to find a deal, clear the bin space and move on to focusing on the 2017/18 crop. Case in point, Ag Value Brokers suggest that in the past decade, feed barley prices delivered into Lethbridge, AB have dropped an average of $13 CAD / MT from June 15 – August 15. Is it worth waiting? Post your stuff that’s coming off the field or still in the bin today on FarmLead to find the best value.
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.