Aug 15 – Grain Prices Fall on Profit-Taking

Good Morning!

Grain prices are pulling back from their day in the green yesterday, as profits are being taken off the table.

“Millions saw the apple fall, but Newton was the one who asked why.” – Bernard Baruch (American Financier)

Grain Prices Fall on Profit-Taking

Grain prices are pulling back from their day in the green yesterday, as profits are being taken off the table. Soybean prices were the leader of the complex yesterday, as noted by Garrett in our daily Grain Markets Today recap.

Weather, the speed of crop development, and varying demand scenarios are all moving grain prices right now.

We started a Twitter poll asking if you think the speed of crop development will be detrimental to the final yields. Join the conversation here and have a say.

On the trade front, the U.S. Grains Council (USGC) said that grain in all forms (GIAF) would hit new export records in 2017/18. [1]

On the flip side, Turkey recently implanted new trade tariffs against the US, claiming this is a direct response to a “deliberate attack” by the US on the Turkish economy. [2] In actuality though, the Turkish economy is in the midst of a perfect storm of “worsening financial conditions, shaky investor sentiment, inadequate management of the economy and tariff threats from the U.S.,” as per JP Morgan. [3]

Turkey’s currency, the Lira, is now down more than 40% against the U.S. Dollar so far in 2018. [4] The concerns in Turkey have spilled over to India, whose own Rupee is down nearly 10% against the U.S. Dollar in 2018. [5]

Why does this matter?

Both Turkey and India are major players in the pulse markets. This means that lentil prices and chickpea prices may be pressured. We’ll be digging in more in the coming days for our GrainCents peas, lentils, and chickpeas readers.

Dry Australia Heating Up Wheat Prices

The USDA didn’t make any changes to its wheat production, export, or stocks estimates in the Land Down Undaa last Friday in the August WASDE report. The agency said that total wheat production in Australia for the 2018/19 crop year would come in at 22 MMT. The agency also said it expects total wheat exports to settle at 16 MMT.

That figure is 1 MMT higher than the export projections issued by the nation’s agricultural ministry. Australia is expected to see increased demand from its feed industry, which fueled a 5% cut by the ministry to 15 MMT in exports.

The Wall Street Journal is reporting that “a region more than twice the size of Texas is in the grip of a drought that’s lasted six years and shows no signs of abating.” [6] Specifically, the eastern states of New South Wales (NSW) and Queensland are seeing record low rainfall. The situation is especially dire in NSW where the winter harvest will likely be the worst in a decade, while still deteriorating. [7]

2018-08-15-australia-dought-grain-prices

Grain Prices Following Soybean Flows

As we mentioned to our Soybean GrainCents subscribers in the last Weekly Digest, China reported that soybean imports in July topped 8 MMT. This was an 8% decrease from June and 20% lower than the July 2017’s soybean imports by the People’s Republic.

A few factors are at play here: China’s stocks of soybeans and meal are sitting at record highs at its ports. Demand for animal feed remains sluggish. And, of course, the 25% tariffs on U.S. beans are driving up prices of the crop in South America, where demand remains high.

AgResource is reporting that Brazilian 2017/18 soybean export sales are now at 90% of the 74.1 MMT projected by the USDA on Friday. This is about 5.3 MMT above last year’s record pace. Also, based on current ship lineup, it looks like Brazil will ship out about 8.2 MMT of soybeans in August.

Going into the Brazilian 2018/19 soybean planting campaign (which starts in a month from now), farmers there may rethink their rotations. This is because a judge there made a move to ban glyphosate until more scientific studies are completed. [8] Right now, most analysts are pegging a 4-5% increase in soybean acres for the 2018/19 campaign compared to last year, despite the burndown ban.

Coming back to the demand side, China’s National Grain and Oil Information Centre says that the country will import 92.8 MMT for the marketing year. The USDA left its 2018/19 Chinese import figure unchanged at 95 MMT.

The University of Missouri’s FAPRI program suggests that the White House’s $12 Billion aid package to American farmers impacted by the trade war will likely get somewhere between $0.25 to $1 USD /bushel from the UDSA. [9]

While not super significant, wouldn’t you take it at these current grain prices?

Similarly, you can find getter grain prices by dealing with a bigger pool of credit-verified buyers on the FarmLead Marketplace. Post your cash or basis offer of your grain on the Marketplace today and start expanding your 2018/19 grain marketing plan.

To growth,  

Brennan Turner

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

 

At 7:20 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3103 
CAD, $1 CAD = $0.7632 USD)

Dec Corn: -2.8¢ (-0.74%) to $3.738 USD or $4.898 CAD
Nov Soybeans: -7.5¢ (-0.85%) to $8.723 USD or $11.429 CAD
Oct Soybean Meal (per short ton): -$2.60 (-0.77%) to $334.00 USD or $437.63 CAD

Oct Soybean Oil (cents per lbs): -0.23¢ (-0.81%) at 28.18¢ USD or 36.92¢ CAD  
Dec Oats: -1.3¢ (-0.48%) to $2.673 USD or $3.502 CAD
Dec Wheat (Chicago): -2.5¢ (-0.45%) to $5.588 USD or $7.322 CAD
Dec Wheat (Kansas City): -0.3¢ (-0.05%) to $5.723 USD or $7.499 CAD

Dec Wheat (Minneapolis): -2.3¢ (-0.38%) to $6.110 USD or $8.066 CAD
Nov Canola: -$2.20 (-0.43%) to $11.462/bu / $505.40/MT CAD or $8.748/bu / $385.73/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.

Most Recent Posts
Dec. 10 - Grain Markets Reverse Ahead of WASDE
December 10, 2018 Brennan Turner
Grain markets this morning are mostly lower ahead of tomorrow’s December WASDE report, with wheat prices the most notable, pulling back from its significant gains on Friday.
October 4: Corn Prices Edge Higher With October WASDE in Focus
October 04, 2018 Garrett Baldwin
Corn prices ticked higher Thursday as traders and analysts began to speculate on next week’s release of the October WASDE report.