August 15 – Fresh Announcements in the Grain Markets

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FarmLead Breakfast Brief
Tuesday, August 15th, 2017

“Losing faith in your own singularity is the start of wisdom, I suppose; also the first announcement of death.”
– Peter Conrad (US sociologist)

Good Morning!

At 7:30 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2732 CAD, $1 CAD = $0.7854 USD)

Dec Corn: -4¢ (-1.05%) to $3.723 USD or $4.74 CAD
Nov Soybeans: -4.8¢ (-0.5%) to $9.335 USD or $11.886 CAD
Oct Soybean Meal (per short ton): -$0.90 (-0.3%) to $299.30 USD or $381.08 CAD
Oct Soybean Oil (cents per lbs): -0.27¢ (-0.8%) to 33.27¢ USD or 42.36¢ CAD
Dec Oats: -3.3¢ (-1.25%) to $2.578 USD or $3.282 CAD
Dec Wheat (Chicago): -5.3¢ (-1.1%) to $4.625 USD or $5.889 CAD
Dec Wheat (Kansas City): -3.5¢ (-0.75%) to $4.608 USD or $5.866 CAD
Dec Wheat (Minneapolis): -7¢ (-1%) to $6.77 USD or $8.62 CAD
Nov Canola: +0.9¢/bu / +$0.40/MT (+0.1%) to $8.951/bu / $394.66/MT USD or $11.397/bu / $502.50/MT CAD

Yesterday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.48 USD or $3.157 CAD
Oct Durum Wheat: unchanged at $6.77 USD or $8.62 CAD
Oct Milling Wheat: -8.2¢ (-1.15%) to $5.60 USD or $7.13 CAD

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Fresh Announcements in the Grain Markets

Grain markets are lower this morning as rain in the forecast, and a stronger US dollar is pressuring commodity prices. A firmer cash market helped limit any losses yesterday.

A few announcements about the general grain trade:

The Wall Street Journal notes that bulk shipping’s key pricing measure, the Baltic Dry Index, hit a three-month high last week. This uptick was mainly due to increased Chinese steel production and higher demand for grain movement.

NAFTA re-negotiations will start up tomorrow. [1] A recent Purdue University poll suggests that 62% of 400 US farmers polled think the revised free trade agreement will help them. [2]

Monitoring Crop Progress

The most recent Manitoba crop report notes that monitoring of insects is ongoing, but that disease pressure remains low. [3]

Yesterday we got the weekly update from the USDA on the health of the American crop. [4]

Garrett pointed out in yesterday’s Grain Markets Today that the good-to-excellent (G/E) ratings of corn improved by 2 points in the past week to 62% while soybeans dropped by 1 to 59% G/E.

As the market had expected, US spring wheat crop ratings remained unchanged at 33% G/E.

It seems a bit odd for US corn conditions to improve at this time of year. Soybeans crop ratings do tend to fall a bit in August. Given the rains over the last 2 weeks, many may wonder why beans failed to show an improvement in G/E ratings? And certainly not the opposite of what corn did.

More rain is expected this week as the Commodity Weather Group estimates that about 70% of US corn and soybean-growing areas will see some precipitation over the next 5 days.

FarmLead Hits DakotaFest

We’re in Mitchell, SD this week for Dakotafest.

On the drive up from Chicago, we engaged in a lot of highway crop scouting.

North of Omaha, NE and about 90 miles south of Sioux City, crops were looking great. But as we started to head north, you could see some crop stress. However, it still doesn’t look as bad as fields in southern Iowa.

The next data points we’re looking for will come in next week’s Farm Journal / Pro Farmer Crop Tour.

Our Doug Kirk will be along for the ride from August 21 to 24 across the western corn-belt.

Given that no one believes the USDA’s August WASDE numbers, this year’s results will be significant.

The problem though is if there’s a large difference between the crop tour and the USDA’s numbers, we can expect price volatility as the trade tries to figure out what’s smoke and what’s fire.

Rich Nelson of Allendale notes that this year’s corn yield estimates from the USDA are starting to look more like 2010. [5] That year, the US average yield was pegged at 163.5 bushels per acre in July, 165 in August, but it then fell to 152.8 by January. A similar fall this year would suggest an average American corn yield below 160 bushels per acre.

Most of the market seems to be sitting somewhere between 162 and 164 right now though.

If we get closer to those yields, then US ending stocks are sure to fall below 2 Billion bushels. According to Dan Hueber, that’s when people will really start to pay attention. [6]

However, Al Kluis notes that only once in the last dozen years have the highs of the corn market’s year been seen in August. [7]

Comparable European Wheat Yields

The USDA published some additional data points on European grain production yesterday, dropping most of their forecasts due to weather issues. [8]

The barley output estimate fell by 400,000 to 58.7 million tonnes. Rye production dropped 300,000 to an estimated 7.6 million tonnes. The corn production estimate also fell 600,000 to 61 million tonnes. They’re calling for a total wheat crop of 148.5 million tonnes, down 1.5 million from their previous forecast.

As Strategie Grain notes, the EU wheat harvest is really a north-south game. [9] In southeastern European countries, yields are looking pretty good. However, in the northeast, production numbers have been pressured by recent rains.

With the Northern Hemisphere harvest starting to ramp up, the only weather premium that could potentially be added back to the market is either rains in September or issues in Australia. [10]


Announcing GrainTests.com                          

Finally, this morning, on behalf of the great team at FarmLead, I’m proud to introduce GrainTests.com.

This new tool will help farmers easily order quality tests for any grain, and you can order from multiple independent labs at the same time.

You can read my perspective here on why independent analysis on your grain is quality.

What’s certain is that between the FarmLead Marketplace and GrainTests.com, your grain marketing potential has never been stronger.

To growth,

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