May 25 – Canola Prices Better Performing Than Soybeans?

Good Morning!

Except for soy oil and canola prices, grain prices are mostly in the green this morning as the complex looks to rebound from yesterday.

“Great ambition is the passion of a great character. Those endowed with it may perform very good or very bad acts. All depends on the principles which direct them.” – Napoleon Bonaparte (former French Emperor)

graincents-trial

 Canola Prices Performing Better Than Soybeans?

Except for soy oil and canola prices, grain prices are in the green this morning as the complex looks to rebound from yesterday. The rally in wheat prices and canola prices is hard to ignore so I’ll dig in a bit more on that later.

There is some buzz in Argentina that the government will stop reducing the export tax on soybeans leaving the country to shore up a depleted bank account (and economy!). [1] Considering that Argentine peso has been smacked lower and lower, the peso price of grain prices in Argentina are at record highs, and now the government wants its cut!

From a weather standpoint in South America, drought conditions in central and southern Brazil continue to persist. Expectations over the next ten days are that there will be little rain and soil moisture will continue to deplete. As such, any rains in June will likely be too late to support a bigger corn crop in Brazil.

Wheat Prices Continue Weather-Rally

As Garrett mentioned in his regular Grain Markets Today column posted yesterday afternoon, grain prices headed lower. Wheat prices were included in the mix but didn’t fare too poorly when compared to corn losing more than 1%.

Drought continues to be talked about in a few places (which is supporting wheat prices), and so we wanted to do a little research of our own. Specific for Canadian farmers, where conditions have been the driest of late, we asked what will the weather bring this summer?

On that note, we did some historical analysis on what durum prices have done in drought years for our GrainCents durum subscribers.

Pro-tip: don’t expect $20 / bushel this year. However, we do look at what it’ll take to get out of this sideways trade that we’ve been in for the last few months in the durum market.

Grain Buyers Low-Balling the Market?

We saw some commentary on Twitter about bids on the FarmLead Marketplace maybe being at low, relative to an impending drought that everyone’s talking about. That might be the case on specific types of grain, but I’ll share with you that this week has been one of the most active on the FarmLead Marketplace: nearly 150 new grain deals on the board!

If you haven’t checked out some of the expanding/incredible versatility of the FarmLead Marketplace, then I encourage you to do so this morning over your coffee. Regarding how you can showcase the type of grain deal you’re looking for, you can now post many types of offers. This includes posting:

• A non-negotiable/firm offer (“it’s like a GPO or target with the entire market!”),
• Basis deals (relevant if you think the futures market is going to go higher), or
• A delivered deal, whereas a farmer, you can set the price you’re looking for to deliver to a specific location.

We’ll have even more features to share with you next week as the amazing development team here at FarmLead continues to ship a quality product that makes cash grain trade easier every day.

More Room on Canola Prices?

Canola prices have had a healthy little run in this shortened-trading-week on the Winnipeg ICE futures board. The July contract hit some resistance around $540 CAD/metric tonne while new crop canola prices on the November contract wiggled its way up to $527 yesterday before closing at $525.90.

The Canadian Loonie dropping below 77.5 cents this week has certainly helped canola prices. Values for other vegetable oils like palm oil and soy oil have also been climbing, which in turn has supported canola prices.

One of the main reasons though is that there is seasonality in demand and speculation. Currently, most producers aren’t thinking about delivery or contracting grain. Further, gossip about how big (or small) the crop is, how it’s performing, etc. starts to build. As shown in the chart, canola prices tend to see some volatility over the summer months, but the downtrend practically always starts in early July.

canola-prices-summer-seasonality

If you’re looking at this chart and thinking about when canola prices will hit the peak this year, you should know that we’ll be digging in via the GrainCents Weekly Canola Digest on what are some of the risks to this rally. We’ll also be thinking through what could keep the party in canola prices going.

Also, we’ll be sharing where our next targets will be regarding what we’re thinking about cash sales. If you’re not yet a canola GrainCents reader, click here to get your free three-week trial started and make sure this valuable information is in your inbox first thing every Sunday morning.

To growth,

Brennan Turner

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

 

At 6:45 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2934 
CAD, $1 CAD = $0.7732 USD)

Jul Corn: 1.3¢ (0.32%) to $4.055 USD or $5.3245 CAD
Jul Soybeans: 5.5¢ (0.53%) to $10.413 USD or $13.468 CAD
Jul Soybean Meal (per short ton): $1.60 (0.42%) to $378.90 USD or $490.07 CAD
Jul Soybean Oil (cents per lbs): -0.01¢ (-0.06%) at 31.60¢ USD or 40.87¢ CAD  
Jul Oats: $0.02 (0.83%) to $2.44 USD or $3.156 CAD
Jul Wheat (Chicago): 6.3¢ (1.19%) to $5.365 USD or $6.939 CAD
Jul Wheat (Kansas City): 7.5¢ (1.35%) to $5.565 USD or $7.308 CAD
Jul Wheat (Minneapolis): 5.8¢ (0.91%) to $6.405 USD or $8.284 CAD
Jul Canola: unchanged to $12.22/bu / $539.00/MT CAD or $9.45/bu / $4176.73/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.

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