FarmLead Breakfast Brief
Monday, December 12th, 2016
“All history is defined by shifting modes of reality and time and how things change.”
– Ira Sachs (US filmmaker)
At 6:45 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3123 CAD, $1 CAD = $0.762 USD)
Mar Corn: -1.3¢ (-0.35%) to $3.583 USD or $4.701 CAD
Jan Soybeans: -2¢ (-0.2%) to $10.465 USD or $13.734 CAD
Jan Soybean Meal (per short ton): -$2.90 (-0.9%) to $315.90 USD or $414.57 CAD
Jan Soybean Oil (cents per lbs): +0.21¢ (+0.55%) to 37.15¢ USD or 48.75¢ CAD
Mar Oats: +1.3¢ (+0.55%) to $2.263 USD or $2.969 CAD
Mar Wheat (Chicago): -6.5¢ (-1.55%) to $4.098 USD or $5.377 CAD
Mar Wheat (Kansas City): -5.5¢ (-1.35%) to $4.08 USD or $5.354 CAD
Mar Wheat (Minneapolis): -1.3¢ (-0.25%) to $5.35 USD or $7.021 CAD
Jan Canola: +3.9¢ or $1.70/MT (+0.35%) to $8.995/bu / $396.62/MT USD or $11.805/bu / $520.50/MT CAD
Friday’s Winnipeg ICE Close
Mar Barley: unchanged at $2.356 USD or $3.092 CAD
Mar Milling Wheat: +5.4¢ (+0.85%) to $4.936 USD or $6.477 CAD
This morning, grain markets are quietly mixed, not following oil’s rally to start the week, while traders are watching for the U.S. Federal Reserve to increase interest rates on Wednesday and trading the U.S. dollar accordingly. Forecasts of well-needed rain are on the horizon for Argentina, which is where many grain traders are focusing their attention these days. On Friday, December 9th we got the U.S.D.A.’s December W.A.S.D.E., but it came & went without much bravado. The USDA is forecasting record corn and soybean crops in the U.S., and without demand increase proportionally, this means 2016/17 carryouts of 252M tonnes of wheat, 222M tonnes of corn, and 83M tonnes of soybeans globally, all records. The lack of changes in the U.S.D.A.’s report on Friday basically means that they’re kicking the can into January for any major updates to American supply and demand tables.
Digging in deeper into the W.A.S.D.E., U.S. corn, wheat, and soybean production, demand, and carryout literally did not move, with 2016/17 ending stocks staying the same as November’s report at 2.403B, 1.143B, & 480M bushels respectively. Similarly, South American corn and soybeans production was barely changed from last month, which was a bit surprising for Argentina, given some of their weather issues. Accordingly, Argentinian corn and soybean production remains at 36.5M and 57M tonnes respectively (other private estimates are as low as 34M and 54M tonnes). Next door in Brazil, soybeans production seems stable at a massive 102M tonnes while corn’s output was increased by 3M tonnes from last month’s estimate to 86.5M tonnes. On the wheat front, the most noticeable change was the Aussie crop getting raised to a record 33M tonnes and exports increased by 3.5M tonnes month-over-month to 24M tonnes. This would put Australia as the 4th largest wheat exporter in the world behind Russia (29M tonnes), America (26.5M tonnes), and the E.U. (25M tonnes).
One question that remains will be the quality of the Australian crop but the U.S.D.A. clearly thinks that at least 2/3s of their production will get shipped out this year. Where we know quality isn’t so hot is in the Canadian durum wheat crop where somewhere around 3.5M tonnes of high-disease or low test weight or high moisture or a combination of all of the above is heading to feed markets. This could pressure on barley use but we’re still seeing low quality / high disease wheat trade on FarmLead between $2 – $3.75 CAD / bushel, depending on all specs (post yours today & don’t worry about trucking this winter!).
Finally, over the weekend we saw a lot more action from U.S. President-Elect Donald Trump in terms of who is going to be joining him in his new administration and the picks were surprising (although we shouldn’t be anymore, should we?). The key updates as it relates to the agricultural industry is oil-industry champion, Oklahoma Attorney General Scott Pruit being nominated to next lead the Environmental Agency, a move that has ethanol producers wondering how long the Renewable Fuels Standard and/or RINs could be around for. Also of note was ex-Exxon Mobil CEO Rex Tillerson being chosen by Trump as his Secretary of State, a move that’s been hotly debated over the weekend given the man’s long-standing relationship with Russia. With a few steel trade veterans on board to help challenge China on some things, it’s not hard to conclude that while The Donald is looking to shake things up. Where we may see the most change is in the energy department and those winds of change that are coming aren’t going to be produce by more windmills.
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.