Dec. 17 – Wheat Prices Leading Monday’s Grain Markets Higher

Wheat prices are leading the grain markets higher this morning as the complex is looking more closely at Russian wheat exports and the harvest in Argentina.

“If you would have your son to walk honourably through the world, you must not attempt to clear the stones from his path, but teach him to walk firmly over them – not insist upon leading him by the hand, but let him learn to go alone.” – Anne Bronte (English poet)

Post Your Specialty and Feed Grain Today

Wheat prices are leading the grain markets higher this morning as the complex is looking more closely at Russian wheat exports and the harvest in Argentina.

Last week on front month March 2019 contracts, Chicago SRW wheat prices closed nearly flat at $5.30 USD / bushel, Kansas City HRW wheat prices gained more than 6 cents to finish at $5.18, and Minneapolis HRS wheat prices gained 2.5¢ to finish at $5.84.

December 14, 2018 Minneapolis HRS wheat Prices futures close

Soybean prices pulled back significantly on Thursday and Friday last week to close the week barely above $9 USD / bushel on the January 2019 contract. The net loss for the week 15¢ or 1.8% compared to last Friday’s close. Canola prices saw their own sell-off on Friday, with the January 2019 contract closing at below $478 CAD / metric tonne, or down nearly $8 on the week.

As a reminder from last Friday’s FarmLead Breakfast Brief, soybean prices will be looking for today’s NOPA crush report to show 168.44 million bushels of soybeans were used by U.S. processors in November.

Grain markets are continuing to watch Huawei situation unfold as it could have a negative impact on the U.S.-Chinese trade war truce, but also Canadian grain exports. [1]

Wheat Prices Watching Weather, Russia

On Friday last week, I dug into whether or not wheat prices were being ignored. That’s not likely going to be the case this week.

Exporters and Russian ag ministry officials are meeting today to align on what do with wheat exports going forward. There have been rumours swirling for a few weeks now that the Russian government might step in to prevent food price inflation and put a cap on wheat exports.

Rain fell last week in northern Argentina, just as the wheat harvest was starting to pick up steam. More rain is expected early this week so this, combined with recent frosts, we might see more production downgrades from the country. It’s obvious to also expect to see quality issues as well. Despite the rain, it’s estimated that the Argentine wheat harvest is nearly 2/3s complete.

Back in North America, the most recent drought monitor report shows that soil moisture isn’t as much of a concern as it was at this time a year ago, but there are still more than a few pockets still considered to be dry. [2]

November 2018 Western Canada Drought Monitor

It’s a similar dynamic being seen in the U.S. as drought conditions continue to decline across most crop-production areas. [3] However, the Pacific Northwest is still quite dry, which wheat prices are watching closely given the amount of winter wheat produced in the region.

December 11, 2018 U.S. Drought Monitor

Western Canada Grain Markets Check-In

Last week, we saw a lot of activity on the FarmLead Marketplace for feed barley and wheat, as well as yellow and green peas. [4] I should’ve added flax to that list as flax prices are sitting at new one-year highs with at a lot of $13 – $13.50 CAD / bushel handles being locked up (freight and delivery period dependent).

I’m now at 80% sold on my 2018/19 flax as I know that Canada is still not the cheapest option when it comes to flax prices. Join me by managing some of the downside risk and post your next lot of flax on the FarmLead Marketplace today.

December 7, 2018 Western Canada Flax Prices

We’ve also seen feed barley prices inch higher in the last week to levels that I’ve been an aggressive seller at. [5] Like flax, it’s almost certain that we’ll see more barley acres seeded in Western Canada for Plant 2019, and that will intuitively have an impact on barley prices, both feed and malt.

That being said, feed barley prices have the added competition of substitutes like American corn and/or other feed cereals like low-quality wheat. From a marketing standpoint, like flax, it’s worth managing some of the downside risk at these elevated levels and post your feed barley on FarmLead today.

December 7, 2018 Western Canada Feed Barley Prices

Finally, durum prices have been nothing to write home about, but there have been some incremental gains worth mentioning. This is especially notable in Italy where values are up nearly 6.5% in the past month. At this point, I’d like to give a quick shoutout to some of the producer organizations for getting over to Italy in an effort to try and re-open that market for Canadian durum prices. [6]

December 12, 2018 Italy Durum Prices

One thing to consider this year for durum wheat prices is that Australia won’t be much of a player, given their drought this past growing season. [7] This means not a lot of Aussie durum exports as most production will go into domestic mills and even feed rations as the demand is so high. That being said, we’re not necessarily seeing those values translate to better prices in Western Canada just yet. As a reminder, the high for durum prices in the 2017/18 crop year was actually in January!

To growth,

Brennan Turner

CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead on Twitter

At 7:30 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3384 
CAD, $1 CAD = $0.7472 USD)

Mar Corn: +0.5¢ (+0.15%) to $3.855 USD or $5.163 CAD
Jan Soybeans: +3.8¢ (+0.4%) to $9.045 USD or $12.113 CAD
Jan Soybean Meal (per short ton): +$0.13 (+0.05%) to $308.80 USD or $413.55 CAD
Jan Soybean Oil (cents per lbs): +0.02¢ (+0.05%) at 28.50¢ USD or 38.17¢ CAD  
Mar Oats: -0.3¢ (-0.1%) to $2.873 USD or $3.847 CAD
Mar Wheat (Chicago): +4.8¢ (+0.9%) to $5.358 USD or $7.175 CAD
Mar Wheat (Kansas City): +4.5¢ (+0.85%) to $5.225 USD or $6.997 CAD
Mar Wheat (Minneapolis): +2.3¢ (+0.4%) to $5.863 USD or $7.851 CAD
Jan Canola: +0.9¢/bu (+0.1%) to $10.845/bu / $478.20/MT CAD or $8.098/bu / $357.07/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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