In today’s Breakfast Brief we look at Egypt’s wheat policy, pulse estimates in India, USDA Crop Progress Report results and selling your low-quality grain.
“If you spend your whole life waiting for the storm, you’ll never enjoy the sunshine.”
– Morris West (Australian author)
Grains this morning are again higher to start the North American day as wet weather becomes the new buzzwords helping propel the market higher, coupled with some short covering.
Oilseeds are finding some support from palm oil prices jumping in Asia as expectations are that stocks will remain tight and substitution effects are likely to occur. Harvest has progressed well in the last few days but quality coming off has been variable. While grain piles in North America get bigger and bigger, wheat supplies in Egypt get shorter and shorter as, with their zero-ergot policy, they’ve held 3 tenders now without anyone wanting to play ball with them. The message from the wheat trade to the Egyptian government is clear and now we’re just asking what are they waiting for?
Getting The Pulse on Pulses
We talked last week about the size of the Indian pulse crop being larger this year, thanks to better rains and more acres, but the crew over at StatPub thinks that India could almost be self-sufficient this year when it comes to pulses. They’re estimating a 22 million metric tonne crop in 2016/17 of all pulses, more or less equaling annual demand. While the kharif crop has been strong, the rabi crop still has to get planted and we won’t know how many acres go to pulses until the end of November.
StatPub estimates the global crop to come in around 53.7 million metric tonnes (7% higher than the 5-year average), including 6.4 million metric tonnes of lentils (+36% vs 5-year average) and 13.2 million metric tonnes of peas (+21% vs 5-year average). While quality is a question mark for lentil crops in Canada, we know it’ll be very hard to get back to the prices available just a month ago, let alone in the spring and winter (I’d put the chance of 40¢/lbs CAD #2 small red lentils at 1% and 35¢/lbs CAD at 15%. What’s your sales position? Post your next block on FarmLead!).
USDA Shows Good Outlook
Yesterday’s USDA crop progress report showed that things continue to look good in the US with 74% of the corn rated in good-to-excellent (G/E) health (vs 68% last year and 5-year average of 59%), their best since 1994, suggesting any future yield cuts would be limited. Meanwhile, harvest has started in a few states, with 9% of the total crop harvested (behind 5-year average of 12%) while 4% of the US soybean crop has been taken off, with 73% of US bean fields still rated G/E (+10 points over last year).
In the coming weeks, the obvious question mark will be productivity in the field with a few rains in the forecast, which will likely add a bit of premium to the market, especially with Brazilian soybean planting pace and its current short-supply situation. Meanwhile, the US spring cereal harvest is practically all in the bin, and 17% of the winter wheat crop has been planted but expectations are that there will be less winter wheat planted this fall in America (if you don’t know why, check out today’s wheat prices and subtract $0.50 – $1/bushel USD to account for current basis in many areas).
Know Your Grain
Speaking of prices, what’s being paid for the lower quality that’s coming off isn’t helping the bank account but it is better than just burning it. However, grain buyers need to know different factors like fusarium, vomitoxin, bushel weight, etc. before they can even give you a bid (it’s not rocket science – order your SGS grain tests now!). While we agree with long-time analyst Jerry Gulke in that you shouldn’t just give away your grain, this is for quality items like #3 or better wheats, corn, beans, and canola. Specifically, when it comes to durum, there’s a very large crop out there (record crop in Canada, largest US durum crop in past 6 years) but a fair amount isn’t great quality, meaning the higher end stuff is worth holding on to for now. However, there is very small market for the worst of the worst stuff so we’re recommending that you don’t delay in marketing the stuff (we’ve got buyers on FarmLead buying up to 25% fusarium / 25ppm vomi wheat. Post yours now!).
At 6:05 AM CDT in the North American futures markets:
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3208 CAD, $1 CAD = $0.7573 USD)
Dec Corn: +1¢ (+0.3%) to $3.383 USD or $4.468 CAD
Nov Soybeans: +7¢ (+0.7%) to $9.795 USD or $12.937 CAD
Dec Soybean Meal (per short ton): +$1 (+0.3%) to $312.10 USD or $412.22 CAD
Dec Soybean Oil (cents per lbs): +0.52¢ (+1.6%) to 33.35¢ USD or 44.05¢ CAD
Dec Oats: +0.8¢ (+0.45%) to $1.738 USD or $2.295 CAD
Dec Wheat (Chicago): +1.5¢ (+0.35%) to $4.055 USD or $5.356 CAD
Dec Wheat (Kansas City): unchanged at $4.055 USD or $5.356 CAD
Dec Wheat (Minneapolis): -0.5¢ (-0.1%)
Nov Canola: +12.2¢/bu / +$5.40/MT (+1.15%) to $8.014/
Yesterday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.226 USD or $2.939 CAD
Dec Durum Wheat: +8.2¢ (+1.1%) to $5.
Dec Milling Wheat: +5.4¢ (+0.95%) to $4.
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.