April 10 – Today’s WASDE Resets Grain Markets Goalposts

Good Morning!

Today’s WASDE isn’t expected to show many fireworks, but grain markets are mostly lower ahead of it.

“Failures, repeated failures, are finger posts on the road to achievement. One fails forward toward success.” – C.S. Lewis (British author)

graincents-trial

Today’s WASDE Resets Grain Markets Goalposts

Ahead of today’s WASDE report out at 12 Eastern, grain prices this morning are mostly lower, with soybeans the only grain or oilseed in the green. Today’s WASDE will do its usual job of resetting the goalposts for grain markets. Regarding what we’re watching for in today’s WASDE, South American production and US corn and soybean exports are the highest priority.

Canola prices are pulling back this morning rather sharply as the Canadian Loonie creeps closer to 79¢ USD and producer selling. This, despite oil prices up significantly this morning as it’s hard to find an oil bear anywhere. The lack of bearish interest right now could be a bad thing though as prices could jolt back down when said bears do eventually show up. [1]

As Garrett mentioned yesterday in the daily Grain Markets Today, wheat prices rallied on weather and crop quality concerns. Average good-to-excellent ratings across the US fell by 2 points week-over-week to just 30%. This is the lowest it’s been in the last 30 years.

wasde-us-winter-wheat-crop-condition-ratings

Don’t Forget About the Weather

AccuWeather’s most recent forecast for spring thaw isn’t that bullish. [2] Warmer temperatures aren’t expected to be seen in Western Canada until later this week, and the “warming up” will be slow-going. The same thing can be said for many Northern US states, which plant similar crops as Canadian Prairies.

Looking south, Brazilian states of Parana and Mato Grosso account for about 45% of total safrinha/second crop corn production in the country. Over the next two weeks though, there is no rain in the forecast. And it’s supposed to be the wet season!

More forecasters who think said wet season could be finished, which is a bit bullish for corn – if you haven’t seen what’s going on in next door in Argentina, soil moisture is pretty important. If models are maintained, corn prices should certainly reflect this (but you definitely won’t see it in the production numbers released in the WASDE later today).

Recent GrainCents Publications

In addition to the weekly digest, that gets sent out every Sunday morning to GrainCents subscribers, here’s a breakdown of some deeper analysis pieces that we’ve published in the past four days. ‎

• Why does the EU hate palm oil and the implications for canola;
• What happens to canola prices with less acres, worse weather;
• If hard red winter wheat is a dying crop in the US;
• What needs to be done to get Canadian durum back into Italy;
• If Algeria can be self-sufficient when it comes to durum wheat production;
• What new malt barley exports mean for Canadian prices;
• Bigger, better UK barley crop expectations in 2018;
• If barley will take a hit or not with NAFTA renegotiations;
• Whether or not desi chickpeas prices have hit the lows;
• When do peas get a harder look from China for more imports;
• Manitoban peas bucking the lower acreage trend in 2018; and,
• Which colour lentil has the best potential profit return in 2018.

China vs. USA vs. WASDE

You can read through all of the April WASDE pre-report average guesstimates, outlined in yesterday’s Breakfast Brief. Today’s WASDE though is certainly overshadowed by the trade tensions between the US and China. And as explained in yesterday’s Breakfast Brief, today’s WASDE numbers will not reflect said tension because no import tariffs are in place and even if they were, the USDA wouldn’t have been able to update the numbers quick enough.

On that thought, cooler heads in China might be prevailing. Chinese President Xi Jinping provided some commentary that will likely assuage the market’s fears. President Xi said that China is working on giving financial institutions more autonomy, in addition to reducing tariffs on imported automobiles, among other matters.

A bit of a contrast to the protectionist policies of US President Trump, no? Well, this is called politics. President Xi was quoted as saying, “In a world aspiring for peace and development, the Cold War and zero-sum mentality look even more out of place.”

Overall, there’s a lot of trade war rhetoric, but there’s also a lot of noise. Specifically, as it relates to US soybeans, Garrett argues that we should all take a deep breath here. There’s more bark than bark, and so let’s get through today’s WASDE before letting the gossip about what Xi and Trump say get the best of us.

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

 

At 7:00 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2667
 CAD, $1 CAD = $0.7895 USD)

May Corn: -0.5¢ (-0.13%) to $3.903 USD or $4.943 CAD
May Soybeans: +3.8¢ (+0.36%) to $10.508 USD or $13.310 CAD
May Soybean Meal (per short ton): -$1.00 (-0.26%) to $388.60 USD or $492.229 CAD
May Soybean Oil (cents per lbs): -0.01¢ (-0.00%) at 31.51¢ USD or 39.91¢ CAD  
May Oats: +0.30¢ (+0.11%) to $2.375 USD or $3.008 CAD
May Wheat (Chicago): -3.3¢ (-0.66%) to $4.875 USD or $6.175 CAD
May Wheat (Kansas City): -5.3¢ (-1.00%) to $5.175 USD or $6.555 CAD
May Wheat (Minneapolis): -3.0¢ (-0.48%) to $6.235 USD or $7.898 CAD
May Canola: -$2.50 (-0.47%) to $11.986/bu / $523.50/MT CAD or $9.463/bu / $417.235 /MT USD

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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