February 16 – Bullish Soybeans, Grain Trade Activity

Good Morning!

Grain markets this morning are mostly in the green as it’s a risk-off sort of day, with all eyes on moisture forecasts for Brazil, Argentina, and the U.S. Southern Plains.

“It’s always too early to quit.” – Norman Vincent Peale


The Chinese New Year’s celebrations are ongoing this week, with the official lunar holiday today, Friday, February 16. It’s the Year of the Dog in Chinese terms, and some of the FarmLead team members who have Chinese ancestry suggest that you need to steer clear of washing clothes and using scissors today to have good luck all year long!

While the Chinese are celebrating, we’re looking at our own three-day weekend here in North America. This could mean the grain markets activity on Tuesday could be extra frothy as market participants have an extra day to digest whether or not Argentina got weekend rains (seems like the story is repeating yourself. And you’re right, it is.).

As Garrett noted in Grain Markets Today, a daily recap of what happens on the futures boards, soybean prices again stole the show yesterday as more bulls enter the pen (more on this later). US soybean export sales last week came within expectations while the NOPA crush report from January showed 163.1 million bushels used. While that’s still a record for the month, the market was expecting 165.6 million bushels, and a 2% drop year-over-year.

U.S. corn got a nice export sales report yesterday, coming in at just under 2 million tonnes! This easily beat expectations.

For wheat, the focus continues to be on the need for rain in the US Southern Plains. [1] Also, Strategie Grains just lowered EU wheat exports for the fourth straight month to 21.4 million tonnes. [2] Competition with the Black Sea and now Argentina continue to be blamed.

We recently took a look at how a rising Argentine wheat industry is affecting both winter wheat and spring wheat markets.

Bullish Soybean Prices About to Bust Open?

In Mato Grosso, IMEA says that soybean harvest progress sits at 28.7%, which is three points behind the five-year average. Rains there have slowed the progress of combines in a few places, but for the most part, it’s not the hand that’s feeding the bulls in this market. That hand is in Argentina.

There certainly needs to be some rain as the soybean and corn crops there are looking for moisture to halt their declining crop conditions. Specifically, the Buenos Aires Grains Exchange says that 56% of the soybean crop is rated good-to-excellent, while 58% of corn is considered G/E. These are both behind last year and five-year averages. Despite the crop condition, the BAGE left their production estimates for the two crops at 50 million and 39 million tonnes respectively.

The smaller soybean crop in Argentine and some delay in the Brazilian soybean harvest means that international buyers are looking back to the US. The pullback in the Greenback the last few days has supported more of the idea that US soybean exports could start to pick up again.

As such, the bulls are getting frothy at the mouth. Money managers cut their short position in soybeans by half last week. Further, most agree, including yours truly, that the CFTC data out later today will show hedge fund managers are no longer in a net short position.

If this is indeed the case, a catalyst for further upside has been lost as there just won’t be any more short-covering, which is a pill for activating higher prices (hence the term, “short-covering rally”).

Heavy Grain Trading Activity

We’ve seen a few more headlines and Twitter comments about strong feed grain trade as demand has been relatively decent and farmers sales have slowed. [3] I don’t know where everyone else is getting their information, but we’ve seen tens of thousands of tonnes of feed grain moved via the FarmLead Marketplace already this month. The theory going around is that demand is up and there aren’t a lot of offers.

I can tell you that we’re seeing farmers who have their feed grains – corn, barley, wheat, oats, and even peas – posted on the FarmLead Marketplace are finding some great deals. Literally 20-30 cents/bushel better than the other bids being shown to them. We’ve also been seeing some heavy trading activity for canola and soybeans on basis deals.

Yes, you can trade basis on the FarmLead Marketplace.

To do so, just put $0.01 in the price field of a Post New Offer page, and indicate in the comments section what sort of basis you’re looking for and the specific delivery period/futures contract you’re looking to price off.

Buyers can come in and make counteroffers just on the basis, helping you lock in something while we see the futures markets rise.

Get your grain posted on the FarmLead Marketplace this morning.

After all, if no one knows what sort of grain deal you’re looking for, how do you expect to get that deal?

To growth,Brennan Turner
President | CEO
TF: 1-855-332-7653
@FarmLead or @GrainCents on Twitter

At 7:45 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2506 CAD, $1 CAD = $0.7996 USD)

Mar Corn: -0.5¢ (-0.14%) to $3.678 USD or $4.599 CAD
Mar Soybeans: -0.3¢ (-0.03%) to $10.175 USD or $12.725 CAD
Mar Soybean Meal (per short ton): +$0.02 (+0.03%) to $370.80 USD or $463.71 CAD
Mar Soybean Oil (cents per lbs): unchanged at 31.80¢ USD or 39.77¢ CAD  
Mar Oats: -2.3¢ (-0.83%) to $2.673 USD or $3.342 CAD
Mar Wheat (Chicago): -3.5¢ (-0.76%) to $4.568 USD or $5.707 CAD
Mar Wheat (Kansas City): -3¢ (-0.63%) to $4.725 USD or $5.903 CAD
Mar Wheat (Minneapolis): -3.5¢ (-0.58%) to $6.035 USD or $7.54 CAD
Mar Canola: 1¢/bu / $0.0/MT (0%) to $11.408/bu / $503/MT CAD or $9.122/bu / $402.21/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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