FarmLead Breakfast Brief
Tuesday, February 21st, 2017
“Without leaps of imagination, or dreaming, we lose the excitement of possibilities. Dreaming, after all, is a form of planning.”
– Gloria Steinem (US political activist)
At 7:15 AM CDT in the North American Futures Markets (*not local cash prices*)
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3132 CAD, $1 CAD = $0.7615 USD)
May Corn: +1¢ (+0.25%) to $3.765 USD or $4.944 CAD
May Soybeans: +6¢ (+10.6%) to $10.493 USD or $13.779 CAD
May Soybean Meal (per short ton): +$2 (+0.6%) to $345.90 USD or $454.24 CAD
May Soybean Oil (cents per lbs): -0.09¢ (-0.25%) to 33.07¢ USD or 43.43¢ CAD
May Oats: +1.8¢ (+0.7%) to $2.53 USD or $3.322 CAD
May Wheat (Chicago): -2¢ (-0.45%) to $4.535 USD or $5.955 CAD
May Wheat (Kansas City): -2.5¢ (-0.55%) to $4.668 USD or $6.129 CAD
May Wheat (Minneapolis): +0.8¢ (+0.15%) to $5.553 USD or $7.292 CAD
May Canola: +0.5¢/bu / +$0.20/MT (+0.05%) to $9.07/bu / $395.75/MT USD or $11.911/bu / $525.20/MT CAD
Friday’s Winnipeg ICE Close
May Barley: tunchanged at $2.271 USD or $2.983 CAD
May Milling Wheat: -16.3¢ (-2.5%) to $4.87 USD or $6.396 CAD
Grains this morning are mostly in the green with soybeans leading the charge, thanks to weekend rains in Argentina, which is providing support to outside oilseed markets like palm oil, soymeal, soyoil, and canola. Managed money raised their long bets in the market last week for all grains, a move that’s generally viewed as a bet against inflation. However, most traders and analysts agree that there’s really no fundamental reasons why wheat and corn prices shouldn’t pull back from their recent highs and that if at least 86M acres are forecasted by the USDA this week in their baseline estimates, then $9 USD / bushel soybeans shouldn’t be far away. The other factor that we’re now watching is what the EPA starts to do regarding the ethanol mandate and if newly appointed Secretary Scott Pruitt has any influence on domestic U.S. grain demand (fun fact: EPA employees are speaking out against their new boss already, having gone “rogue” on Twitter). Overall, with the weather premium trade starting to lose some of its lustre as more of the South American crop gets known, and 2017/18 crop gets dreamed of.
Speaking of dreams, some of the numbers seen on yield monitors in Brazil are new records, forcing AgResource to raise their Brazilian soybean crop estimate to 107 MMT late last week, which would be more than a 10.5M-tonne increase year-over-year. With a crop that size, it would suggest that Brazil will be able to export soybeans all the way into October, even with a the torrid pace that they’re running at (exports to-date for the month of February are already double what they were at this time a year ago). On that note, 52% of the soybean crop has been cut in Mato Grosso now 52% complete, while other major regions of Mato Grosso do Sul and Goias are each near 40% harvested. Next door in Argentina, crops did get a little wet after the weekend but a few helpful showers are expected this coming week as we head into March, one of the more important times of the growing season for the crop there. Switching continents, Canadian canola crush margins feel to a 10-month low last week to under $90/tonne as crush capacity used in the Great White North dropped below 85%, joining exports which also pulled back from the strong pace we’ve seen lately.
Looking over across the Atlantic Ocean, the European Commission recently admitted that winterkill on fall-seeded crops there will remain limited and that most areas hit by extremely cold temperatures likely had a good layer of snow for protection. While that’s good news for farmers with fields that are “in play”, it also means relatively decent production, especially in the E.U. bloc where a subpar 2016/17 led to a significant decline in production, especially in France. However, with output expected to rebound in 2017/18 in the EU, and Russia looking pretty similar, the two European players are likely to go head-to-head as top exporter in the next marketing year. Further to that, with the Russian rouble strengthening lately, it looks like EU exporters will have the early lead. The other major competitor is Australia, who on the heels of a monster wheat harvest, have been aggressively trying to move product. While they literally just got done Harvest 2016, National Australia Bank is already pointing to the threat of El Nino (a bit of a dream in my opinion right now) and a higher Australian Dollar limiting Aussie exports in the 12-18-month horizon.
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.