FarmLead Breakfast Brief
Tuesday, August 16th, 2016
“Manners are one of the greatest engines of influence ever given to man.”
-Richard Whatley (British theologian)
At 7:00 AM CDT in the North American futures markets:
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2818 CAD, $1 CAD = $0.78 USD)
Dec Corn: +0.8¢ (+0.2%) to $3.378 USD or $4.329 CAD
Nov Soybeans: +3¢ (+0.3%) to $10.123 USD or $12.975 CAD
Oct Soybean Meal (per short ton): +$2.90 (+0.85%) to $339.80 USD or $435.56 CAD
Oct Soybean Oil (cents per lbs): -0.18¢ (-0.55%) to 33.17¢ USD or 42.52¢ CAD
Dec Oats: unchanged at $1.865 USD or $2.391 CAD
Dec Wheat (Chicago): -2¢ (-0.45%) to $4.363 USD or $5.592 CAD
Dec Wheat (Kansas City): -1.5¢ (-0.35%) to $4.363 USD or $5.592 CAD
Dec Wheat (Minneapolis): +0.5¢ (+0.1%) to $5.175 USD or $6.633 CAD
Nov Canola: -5.9¢ / -$2.60/MT (-0.55%) to $8.242/bu / $363.40/MT USD or $10.566/bu / $465.90/MT CAD
Yesterday’s Winnipeg ICE Close
Oct Barley: unchanged at $2.344 USD or $3.005 CAD
Oct Durum Wheat: unchanged at $5.541 USD or $7.103 CAD
Oct Milling Wheat: +5.4¢ (+0.95%) to $4.543 USD or $5.824 CAD
Start The Engines
Grains this morning are trying to stay at their elevated levels from yesterday as the US dollar is getting smacked this morning, down 1%, with the Canadian Loonie hovering around 78 cents, which is also being supported by oil prices sitting at 5-week highs. The buzz for Chinese demand continues, which, with the lower US dollar, helped push beans higher, with canola along for the ride. Playing on the bearish side though, NOPA reported at 143.7M bushels of beans were crushed in the US in June (down almost 1% year-over-year), less than the 146.73M the market was expecting. Corn is likely seeing some short-covering, but there’s a long way to go before being net long again. Germany’s Farm Cooperatives Association is now forecast the 2016 wheat crop to be down almost 9% from 2015 at 24.2M tonnes. Meanwhile, later this morning we’ll get Statistics Canada’s estimates for the crop in the Great White North and it’s widely expected that they’ll come in near the USDA’s call on Friday for 30M tonnes of wheat and 17.6M tonnes of canola, just as combine and swather engines are starting up to take the crop off.
After finding out that they bought 2M tonnes less of domestic wheat than originally suggested, Egyptian officials has arrested over a dozen people related to the corruption scandal that falsely claimed almost $70M USD worth of grain that didn’t exist! While they deal with some bad apples internally, the Egyptian quarantine agency is now forcing ships to sit in port, remaining unloaded, until the wheat in the hold passes final inspection (likely an additional cost that will be factored in to future bids). While Egypt continues to be an scab wheat traders have to pick at, the Kremlin backing Syrian President Assad has lead Syria to only want to source wheat from Russia (and expectations are that, with such a war-torn country, imports will be large this year).
Yesterday we got another crop progress update from the USDA, who says that crops remain in pretty decent condition with the portion of US corn crops rated good-to-excellent (G/E) staying at 74% and the percentage of G/E soybeans remaining at 72%. Everything is ahead of schedule/last year/5-year averages with 73% of corn fields in the dough staged and 21% dented, while 95% of US soybean fields are dented & 80% are setting pods. The US winter wheat harvest is practically finished at 97%, while 80% of oats are in the bin, 55% of barley crops have been combined (71% G/E), and 48% of the US spring wheat has been taken off (with some big yields and decent quality in the US northern states).
Cargill and Louis Dreyfus are each idling 2 of their soybean crush plants in Brazil (or 4 of the 11 between them) thanks to declining available supplies and margins dropping like the yield monitor as you start cutting into flooded out areas (saw that a bit yesterday as we started on yellow peas in Foam Lake, SK!). Soymeal prices in Brazil are down about 12% month-over-month, mainly because of the weakened position of the poultry industry in Brazil, the largest user of the oilseed crush byproduct. 1 crusher, Algar Agro (owns 2 plants) says total soybean crush volumes will likely fall about 5% this year but Abiove says it’ll be little changed from last year at 40.7M tonnes. If there are soybeans left to crush in Brazil, farmers are holding onto them in hoping for a price rebound as they start planting the 2016/17 crop starting September 15th. So, while we are taking crop off in North America, the South Americans are just getting ready to start their engines again.
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.