Despite a usually uneventful April WASDE coming out tomorrow, April 10, grain markets are giddy and in the green this morning.
“When you are thwarted, it is your own attitude that is out of order.” – Meister Eckhart (German theologian)
USDA’s April WASDE Overshadowed by China
Grain markets are in the green this morning as the complex prepares for tomorrow’s April WASDE report, out at 12 pm Eastern.
As Garrett mentioned in Friday afternoon’s Grain Markets Today, wheat prices found some strength on woeful weather. They’re doing more of the same this morning.
Specifically, colder temperatures in the winter wheat-growing regions of the US Southern Plains are putting crops that are just coming out of dormancy at risk. For spring wheat and durum, there’s concern that not as many acres will get seeded with the cereals because of the threat of a shorter growing season.
Across the pond, French wheat conditions are at a three-year low after cold temperatures and a lack of sunshine has limited growth prospects. 78% of the French soft wheat crop is rated in good-to-excellent (G/E) health, near the four-year low of 77%. A year ago at this time, the French soft wheat crop was rated at 90% G/E. The French durum wheat crop’s G/E rating stayed flat at 79%, also the same as this time a year ago.
US Soybeans or Canadian Canola at Risk in China?
Which one is it?
Over the weekend, on our FarmLead Insights page, Garrett took a deeper dive into the threat of a trade war between the US and China, with special attention paid to what will happen to US soybeans. It’s definitely worth a read as it gives more clarity of how this sort of “crowded traded” could play out. It always makes it clear that if you put too much of a bet on one horse, you’re putting yourself at risk (the same could be said for Canadian peas and lentils in terms of trade with India!)
Soybeans out of Brazilian ports are already trading at about $1 USD / bushel higher than those out of US ports. Thus, if you’re an international soybean buyer (i.e. EU or China), you’re buying the crap out of those “cheaper” opportunities.
On the flipside, there’s a lot of talk that more canola will go into China to replace soybeans! I’m a bit of a doubter and that’s part of the reason why I think canola prices are feeling extremely top heavy, with the moves to the upside just inching higher.
Yes, there is delayed Plant 2018 risk, crush margins, and port basis values have improved but the small moves are more of an indication of everyone pushing their chips closer to the edge of the table, worried who’s will fall off first. We’ve passed technical lines of resistance, but canola prices haven’t shot up is another factor that leads me to be a more bearish today.
That being said, we’re cognizant that canola exports are still sitting relatively strong. This despite, some of the woeful grain transportation we’ve seen this winter.
Last week, Garrett dug into the details of the new Bill C-49 for all GrainCents readers, explaining the details of the new transportation bill as it relates to Canadian grain.
Canadian rail logistics continue to be a pain for grain movement and it doesn’t look like the timetable for things improve is all that generous. While spring weather should help move more grain, Mother Nature’s willingness to help start spring is about as consistent as those train locomotives showing up to move grain! And there could be less of them soon!
A union representing roughly 3,000 conductors and locomotive engineers at CP Railway have voted to strike on April 21.  This, in addition to the clear and present threat that passing the updated Canadian Transportation bill before Parliament breaks for summer will be one heck of a challenge. 
April WASDE a Non-Event?
Tomorrow at 12 pm Eastern, we’ll get the USDA’s April WASDE report. Truth be told, the April WASDE doesn’t usually have too many surprises for us and it’s usually a bit of a non-event. That being said, the market is looking for some more finalized corn and soybean production numbers in South America.
Keep in mind that any reflections of a trade war won’t be reflected in the April WASDE for two reasons. First, there is no trade war; there’s only talk of one. Again, click that link about to read Garrett’s perspective of why we need to take a breather on the US-Chinese game of chicken. Second, the April WASDE was basically finalized before any of these ideas of import tariffs were introduced.
Here are average pre-report expectations going into the April WASDE:
Humboldt Hockey Team Bus Crash Hits Home
Unless you’ve been living under a rock, we got the terrible news last Friday evening that the Humboldt Jr. A hockey team bus had been in a serious accident.
I’ve driven that #35 Saskatchewan highway a lot; I’ve ridden a lot of those hockey buses. This one hit home for me. Feeling pained by this tragedy, I wrote some words, reflecting on what that “bus” means to me and a lot of other people.