Grain futures are mixed this morning as contrasting weather in North and South America are driving the markets ahead of this Friday’s WASDE report.
“Miracles are not contrary to nature, but only contrary to what we know about nature.” – Saint Augustine (Roman Catholic theologian…and a Saint)
Grain prices this morning are mostly lower again as better weather in South America is minimizing the bullish impact of colder weather in North America.
Yesterday, both Brent and WTI oil prices touched highs not seen since May 2015 at $68 and USD 62 per barrel respectively. 
In Grain Markets Today, Garrett mentioned yesterday how grain prices slumped on broader supply concerns ahead of this Friday’s WASDE.
A couple of the key themes going into the report include:
- China buying more soybeans (but from where?);
- Lagging US corn exports; and,
- Where the international high protein buyers are.
On this last point, US winter wheat sales are behind where they were at this time a year ago. Even though some sales were made into North Africa before Christmas, US winter wheat prices have rallied since then.
Case in point, In the most recent tender for Algeria, it was noted that US winter wheat was USD 15/ metric tonne more expensive than the closest offer and $30 off from the winning bid from Argentina. 
In Thursday’s Breakfast Brief, I’ll dig into all the pre-report guesstimates that are circling.
Before that though, there is a pretty bearish tone of the market speak out there right, suggesting that if we do get any bullish surprises, there could be fireworks.
Where’s La Nina?
New models are suggesting that La Niña will be weakening by springtime. As per Drew Lerner of World Weather Inc., this would suggest more moisture for the likes of the Northern Plains and Western Canada. 
It doesn’t guarantee that this will take those areas in severe or extreme or exceptional states of drought back to adequate soil moisture levels.
We’ve discussed in the past in great detail what our expectations are for the durum market and spring wheat prices if moisture starts to show up, or if it stays away. Just to be clear though, it’s not just all about if it’s dry or not – there are a few other factors that we think can exacerbate or cool off any price rallies or sell-offs.
Back in South America though, decent rains were seen falling in southeast and central-west regions of Brazil, as well as some parts of Northern Argentina. AgRural notes that the classic La Niña conditions haven’t been seen in South America, or else it would be a full-blown drought. However, as mentioned, rains are falling. They are more consistent in northern Brazil, but certainly more sporadic in the southern areas of Brazil and Northern Argentina.
The one potentially bullish takeaway here is that Brazil is getting into their soybean harvest and the rains could impact progress, in addition to increasing disease risk like soy rust. 
Soybean and Corn Advisor’s Dr. Cordonnier dropped his soybean forecast in Argentina by 2 million tonnes to 53 million tonnes for the 2017/18 harvest. Conversely, he raised his estimate for Brazil’s 2017/18 soybean crop to 110 million tonnes.
On the corn front, Cordonnier left Brazil’s estimate at 88 million tonnes but lowered Argentine’s production forecast by 1 million tonnes to 41 million.
It’s worth noting that the current USDA forecast for corn production in South America is 42 million tonnes for Argentina and 95 million tonnes in Brazil.
In Argentina, the “optimal” seeding window has closed for corn. Still, 22% – or 3 million acres – of corn still needs to get planted, and mostly in the north where dryness is an issue.
2018 Grain, Oilseed, and Pulses Market Outlook
Canola prices are facing some headwinds, namely that of lower soybean prices in Chicago and the strength of the Canadian Loonie sitting about 80 cents USD.
Pulse prices in Western Canada and the US Northern Plains have been trading sideways for the last few weeks. Even before the announcement of India’s 30% import tax on lentils, prices for the pulse were quite subdued. 
Through the late summer and into the fall, we were making timestamped sales on all pulses as the winds continued to point towards more bearish pressures.
Later today on GrainCents, we’ll be posting the 2018 oats market outlook, as well as what we are expecting for the lentil market.
As a reminder, we’ve already published our market outlooks for:
Sign up for your GrainCents account today, customizable only to the crops you care about and start your 2018 grain marketing year off right.
Grain Price Discovery
As a parting note, we saw a piece in Grainews concerning grain price discovery before the break and how tough it is in a post-Canadian Wheat Board World. Our product manager, John From, took the opportunity to highlight the history of grain price discovery, and how FarmLead has a bunch of free tools to help find grain prices.
One such is something named, Price Discovery. Thanks to gathering over 30,000 different cash bids across North America, we can show you the low, high, and average cash grain prices around your location for specific movement period.
Further, not only do we show what prices in future delivery months are looking like, but also where prices for that specific delivery month have been. Perspective is everything.
Due to travel, no grain futures price data is shown in today’s Breakfast Brief but you can see them by clicking here.
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.