Grain markets are slightly lower this morning with front-month contract soybean prices still holding on above $9 USD/bushel, levels not seen since August when there were some crop production concerns.
“Headlines, in a way, are what mislead you because bad news is a headline, and gradual improvement is not.”
– Bill Gates (Microsoft Co-founder)
Soybean Prices Looking for Next Headlines
Grain markets are slightly lower this morning with front-month contract soybean prices still holding on above $9 USD/bushel, levels not seen since August when there were some crop production concerns. We all know now that those soybean yield concerns were way overblown, given the record crop produced in the U.S. for the second straight year.
In light of President George H.W. Bush’s passing, all stocks, bond, and interest rate, futures, and options products are closed for the day, but electronic will still be open for most commodities.  It might a good thing to take a day off after the volatility we’ve seen in the stock market the past few days, notably the strong rally on Monday followed by yesterday’s broader sell-off.
Also in other markets, Qatar is set to leave OPEC as it doesn’t want to be part of the cartel and join in the production-cutting program that’s expected.  The move is likely to boost goodwill with the U.S. administration (but likely make Saudi Arabia mad) and will allow the country to regain its focus on being a leading producer of natural gas.
China Definitely Buying Barley
While there are a lot of questions around China’s purchasing plans for soybeans, we know that they’re definitely buying more barley.  As the world’s largest beer market, it’s an obvious export destination for any country producing malt barley. Last year, China imported 1.4 MMT of Canadian malt barley but it’s suggested that things might fall back to about 1MMT this year.
Given the dry conditions in both Europe and Australia though, there’s a strong likelihood that we’ll see that 1.4 MMT reached again. Right now, Agriculture Canada is only expecting 2.4 MMT of total Canadian barley exports, which would be a pull back from last year’s new record of 2.88 MMT.
Through Week 17 of the 2018/19 crop year though, Canadian barley exports are tracking nearly 26% better than last year’s pace at this time with about 750,000 MT shipped out so far.
Can this strong pace continue? Will barley prices stay elevated at the current levels, if not head higher? As it specifically relates to feed barley prices, there is a lot of competition from other feed grain cereals and American corn, albeit the latter is likely to slow down as use of the former picks up. 
For malt barley prices, it’s safe to assume that you’re going to see more acres planted in 2019.
This in mind, why don’t you manage some of this downside risk today and get your barley posted today in front of the nearly 200 different credit-verified barley buyers on the FarmLead Marketplace?
Why Aren’t Soybean Prices Rallying?
Everyone thought that soybean prices would rally as soon as there was some sort of agreement between China and the U.S. regarding the trade war. However, as mentioned in Monday’s FarmLead Breakfast Brief, grain markets already knew that there’s still a 25% import tariff on soybeans!
The mood in Brazil is a bit skittish; after all, they’ve enjoyed quite the run of soybean exports for the last few months! Customs data show that Brazilian soybean shipments to China doubled year-over-year to a new November record of 5.07 MMT. With one month left to go in their 2017/18 crop year, Brazil has now exported about 80 MMT of soybeans, up 23% through same point in 2017. 
Further, there is already a little more than 3 MMT of soybeans lined up to ship this month, bringing the total crop-year movement to more than 83 MMT! For perspective, the USDA’s estimate of Brazil’s 2017/18 crop year soybean exports is 76.2 MMT. Perhaps we’ll see a revision in next week’s WASDE report on Tuesday, December 11?
Basically, soybean prices are waiting around for the next announcement from either Beijing or Washington to help them decide which sort of bearish or bullish strategy to take. Using historical trading activity this year isn’t exactly proving to be the best guide either.
What I do know today, however, is that U.S. soybean ending stocks for 2018/19 are currently set by the USDA at 955 million bushels. With the window of exporting U.S. soybeans to China basically finished, we know that there isn’t much likelihood in this carryout number dropping significantly.