In Today’s Breakfast Brief, we look at Brazil’s effect on corn & soybean sales and where canola is going.
“Success is nothing more than a few simple disciplines, practiced every day.”
– Jim Rohn (US entrepreneur)
Grains this morning are mostly lower after a strong showing in the green yesterday, thanks to some strong fund buying across the board.
Yesterday, the Brazilian government (in all of its shining glory / lack thereof), chose to eliminate its corn import tax in order to reverse its tightening local supplies. The move opens up Brazil’s door to import more corn (the US may get some business) to help fill its coffers after a weaker Brazilian Real over the past year has supported more export than domestic sales.
Across the Atlantic Ocean, the South African corn crop got downgraded for the 3rd time this season, this time to 7 million metric tonnes, or the lowest output since 2006 after its worst drought in a century! We knew South Africa was going to have a smaller corn crop a long time ago, so the market and its simple ways continue to say, “next headline please!”
Soybean had yet another successful day yesterday, but the rally wasn’t due to my contrarian comments yesterday, but moreso the continuous rains in Argentina that is affecting the crop there, with crop losses estimated anywhere from 1 to 10 metric million tonnes (the market seems to be pricing in the latter).
Hitting a 9-month high, the oilseed was also supported by the Brazilian Real appreciating, which means that it becomes more expensive for international buyers to purchase soybeans from the South American nation. Cooler heads are prevailing though, with the smart money saying to make sales on old crop beans, locking in some cash profit on new crop beans, and if you’re reluctant sell, that decision better be strategic & not emotional (P.S. saying the marketing is going to $11/bushel is not strategic, it’s emotional…plus $10 may not be around that long according to GrainTV).
Where’s Canola Going?
Canola wasn’t able follow its oilseed brethren higher yesterday as with oil prices climbing, the Canadian Loonie rallied as well to above 79 cents USD. Canola is gaining this morning on some follow-on buying with the Loonie giving back some of its gains, with new crop prices sitting above $11/bushel CAD on the futures board in Winnipeg but with basis levels, the coveted level on the cash front isn’t being seen everywhere. Tomorrow morning we’ll get StatsCan’s planting estimates, which, according to a Reuters poll of analysts, will say 20.4 million acres of canola, which would be a 1.5% increase from last year’s area.
On the flipside, less wheat will get seeded this year, whereas more peas and lentils will get put in (if you didn’t know that, have you been living under a rock?).
On a personal note, today I’ll be attending the Mandi Schwartz Memorial Marrow Donor Drive at Yale University in New Haven, CT (I sit on the board of the foundation that bears her name, the late sister of current St. Louis Blues forward, Jaden Schwartz). While numbers aren’t shared with us from our events in Canada, just from the event at Yale in the past 6 years, we know we’ve helped save 30 lives through successful transplants from donors signed up at the event (Pro Tip: they don’t drill into your bones to get the marrow anymore). To sign up, it’s pretty simple as all you have to do is swab the inside of your cheek so click here if you’re in Canada or click here you’re in the U.S. to potentially save a life.
At 6:03 AM CDT in the North American futures markets:
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2667 CAD, $1 CAD = $0.7893 USD)
July Corn: +1.8¢ (+0.45%) to $3.923 USD or $4.969 CAD
July Soybeans: -3¢ (-0.3%) to $9.918 USD or $12.562 CAD
July Soybean Meal (per short ton): -$0.70 (-0.25%) to $307.20 USD or $389.12 CAD
July Soybean Oil (cents per lbs): –0.09¢ (-0.25%) to 34.98¢ USD or 44.31¢ CAD
July Oats: +1.5¢ (+0.75%) to $2.06 USD or $2.609 CAD
July Wheat (Chicago): +2.8¢ (+0.55%) to $4.92 USD or $6.295 CAD
July Wheat (Kansas City): +2.3¢ (+0.45%) to $4.90 USD or $6.207 CAD
July Wheat (Minneapolis): unchanged at $5.435 USD or $6.884 CAD
July Canola: +3.2¢/bu / +$1.40/MT (+0.3%) to $8.70/bu / $383.60/MT USD or $11.022/bu / $486/MT CAD
Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.956 USD or $3.789 CAD
July Durum Wheat: unchanged at $6.401 USD or $8.11 CAD
July Milling Wheat: +8.2¢ (+1.25%) to $5.155 USD or $6.532 CAD
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.