Aug 16 – Soybean Prices Continue Rollercoaster Ride

Good Morning!

Soybean prices are leading the grain complex this morning, as the market rebounds from yesterday’s down day.

“Giving up is conceding that things will never get better, and that is just not true. Ups and downs are a constant in life.” – Aimee Mullins (American Athlete)

Soybean Prices Continue Rollercoaster Ride

Grain markets continue to see-saw this week, with soybean prices leading the complex in the green this morning after a down day yesterday. Soybean prices saw spillover pressure yesterday from the uncertain situation in Turkey and the ongoing trade spate between the United States and China.

Also impacting soybean prices is the forecast that much of the corn/soybean belt is expected to get somewhere between 2 – 3 inches over the next two days. As AgResource suggests, this is especially significant for places like Illinois where, through the first half of August, they’ve only gotten about 35% of their average rainfall. Should the precipitation materialize though, the state would likely end August closer to the norm when it comes to seeing the rain gauges get filled.

Conversely, what was bullish for soybean prices yesterday was that US soybean crush volumes for July 2018 came in at 167.73 million bushels. This was almost 6 million bushels more than what the market was expecting and a jump of 16% compared to July 2017’s crush volumes!

Canola prices are earning some support from soybean prices rallying a bit, but can it hold on? There is the risk that canola yields will come in smaller this year in Canada as well-above-average temperatures have negatively impacted the crop. [1] However, canola prices are about $80 CAD /MT more expensive than soybean prices right now. We’ll be explaining in more detail for our GrainCents canola readers in our upcoming Weekly Digest what factor we think will win out.

As Garrett mentioned in yesterday afternoon’s Grain Markets Today recap, wheat prices took the biggest hit, dropping anywhere from 10 to 13 cents USD/bushel in Chicago, Kansas, and Minneapolis (the exchange locations of SRW, HRW, and HRS wheat prices). This morning though, wheat prices are rebounding nicely and have recovered most of yesterday’s losses.

Argentina Impact Soybean Prices (Again)

While trade war talk has died down a bit, Argentina is starting to get a lot of attention lately for stopping the gradual easing of export taxes on soymeal and soyoil. Argentina’s soybean crush in the first half of 2018 was already down 13.5% year-over-year to just a little under 18.5 MMT.

With taxes now stuck at 23% (which is still down from 32% in 2015), there’s more speculation that additional plants will sit idle. This is because the suspension of the tax reduction plan will add as much as $10 USD /MT to soybean prices in Argentina, and for an industry in the country where margins are already tight, that additional cost will be too much.

Ultimately, the move will likely mean lower crush activity in Argentina. This, in turn, should be welcomed by the US soybean industry who can quickly pick up the slack, and at a time where there’s a lot of soybeans likely to go around!

Harvest 2018 Picking Up Speed

Combines are rolling across North America on everything from soybeans in the southeastern corners to lentils and chickpeas in Saskatchewan.

As usual, the earliest harvest crops in all areas are looking pretty good, but heat-stress is a major concern for the later-planted crops, especially the more north you go. This is mainly because of the advanced crop development that we’ve seen in the 2018 growing season (if you haven’t voted in our Twitter poll about the impact of faster crop development, please do so here now).

That being said, the forecast for Harvest 2018 is looking fairly ideal, and frost is less of an issue because of the speed of the crop’s development [2] This also means that next week’s ProFarmer Crop Tour across the US Midwest will likely be easier to predict, since the crop is further along in maturity. [3]

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 = $1.3146 
CAD, $1 CAD = $0.7607 USD)

Dec Corn: 3.8¢ (1.01%) to $3.798 USD or $4.993 CAD
Nov Soybeans: 16.8¢ (1.93%) to $8.858 USD or $11.645 CAD
Oct Soybean Meal (per short ton): $5.00 (1.51%) to $335.10 USD or $440.53 CAD

Oct Soybean Oil (cents per lbs): 0.15¢ (0.54%) at 28.15¢ USD or 37.01¢ CAD  
Dec Oats: 1.0¢ (0.39%) to $2.605 USD or $3.425 CAD
Dec Wheat (Chicago): 7.0¢ (1.27%) to $5.588 USD or $7.346 CAD
Dec Wheat (Kansas City): 7.3¢ (1.30%) to $5.700 USD or $7.493 CAD

Dec Wheat (Minneapolis): 6.0¢ (1.00%) to $6.068 USD or $7.977 CAD
Nov Canola: $1.20 (0.24%) to $11.587/bu / $510.90/MT CAD or $8.814/bu / $388.63/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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