June 26 – Crop Progress Overshadowed by Trade War

Good Morning!

Grain prices this morning are mixed as the complex tries to rebound on slightly bullish crop progress and weather data points.

“Hope is important because it can make the present moment less difficult to bear. If we believe that tomorrow will be better, we can bear a hardship today.” -Thich Nhat Hanh (Vietnamese Monk and Activist)

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Crop Progress Overshadowed by Trade War

Grain prices this morning are mixed as the complex tries to decipher a slightly bullish crop progress report and rebound from yesterday’s sell-off on heightened trade war talk. Supporting grain prices are some fresh weather forecasts which are showing some hot, dry weather. We’ve also got the acreage reports out from StatsCan AND the USDA on Friday!

Comparably, we saw headlines from the White House that they’ll try to stop Chinese companies from investing in American firms. [1] There’s also some talk from US President Trump that he’s considering “Tariff Payments” to try and help prop up the American ag industry using a division of the USDA, called the Commodity Credit Corporation [doesn’t sound very governmental, eh?) [2]

As Garrett discussed in yesterday’s trading recap, Grain Markets Today, soybean prices plunged again by 20 cents. Corn prices fell by nearly 2% while winter wheat prices in Chicago and Kansas City dropped between 15 and 20 cents, depending on the contract. Spring wheat prices in Minneapolis lost about a dime, while canola prices on the new crop, November 2018 contract lost a few bucks to fall back to levels seen in early March.

It looks like the EPA will announce a biofuel target for 2019 of 19.9 billion gallons, up 3.1% year-over-year. [3] The increase is mainly attributed to more advanced biofuels, with conventional renewable fuels like corn-based ethanol earning the same number that they did in 2018: 15 billion gallons. The announcement was slightly delayed as the debate raged on over the potential change for refiners to blend biofuels into gasoline and diesel (a change in the RFS and its impact on corn prices has something that we’ve been covering at GrainCents for quite some time).

Crop Progress Still Impressive

Garrett provided a full recap of the USDA’s crop progress report in yesterday’s Grain Markets Today, so I won’t dig into the details but here are the main takeaways:

• Soybeans crop rating: 73% rated good-to-excellent (G/E), unchanged week-over-week (WoW)
• Corn crop rating: 77% G/E, -1 WoW
• Spring wheat crop rating: 77% G/E, -1 WoW
• Barley: 83% G/E, -1 WoW
• Oats: 72%, +2 WoW
• Winter wheat rating: 37% G/E, -2 WoW
• Winter wheat harvest: 41%, +14 WoW

While the US winter wheat harvest is certainly accelerating (now 8 points above the five-year average), but quality continues to be a concern. This is especially true in central and western Kansas where rains are stalling combines in the field. [4]

The precipitation is a double-edged sword as it likely will deteriorate the quality of winter wheat ready to come off, but it will certainly help charge desperately-depleted soil moisture conditions in the area. For perspective, look at where Kansas, Oklahoma, and Texas G/E crop ratings are today versus a year ago in the table below.

Spring Wheat Crop Condition

Bedlam in Brazil & Anarchy in Argentina?

The safrinha corn crop in Brazil continues to be downgraded as harvest goes on, but that’s the least of the country’s worries. Grain movement has slowed to a trickle as freight costs have skyrocketed with the implementation of a minimum freight rate across Brazil. There is a lot of contention with the issues as it has complicated local supply and demand factors, with the result being little interest in grain getting contracted.

In Argentina, grain movement has also stalled thanks to another strike by workers at crush facilities and ports. [5] The workers are looking for better wages to compensate for rising inflation, on account of Argentina’s Peso losing about 50% against the US Dollar so far in 2018!

While the strike is only a 24-hour affair, the rise of domestic and international political unrest is a growing theme that we’re watching for all major crops for GrainCents readers, especially in this past Sunday’s weekly digest emails.

In a time where there are more noise and moving parts than ever, I invite you to sign up for a free 3-week trial of GrainCents and at least be on top of things til mid-July. If you have any questions, please send us a note here under the category Site Features and Tools.

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 = $1.3328 
CAD, $1 CAD = $0.7503 USD)

Sept Corn: 2.3¢ (0.63%) to $3.618 USD or $4.821 CAD
Aug Soybeans: 5.3¢ (0.60%) to $8.853 USD or $11.798 CAD
Aug Soybean Meal (per short ton): $2.00 (0.60%) to $335.50 USD or $447.14 CAD
Aug Soybean Oil (cents per lbs): 0.09¢ (0.31%) at 29.14¢ USD or 38.84¢ CAD  
Sept Oats: -2.0¢ (-0.84%)  to $2.365 USD or $3.152 CAD
Sept Wheat (Chicago): 3.3¢ (0.66%) to $4.938 USD or $6.581 CADS
Sept Wheat (Kansas City): 0.5¢ (0.10%) to $4.880 USD or $6.504 CAD

Sept Wheat (Minneapolis): 2.0¢ (0.36%) to $5.533 USD or $7.374 CAD
Nov Canola: $1.10 (0.22%) to $11.582/bu / $510.70/MT CAD or $8.691/bu / $383.19/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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