Grain markets this morning are quietly mixed again, accounting for some bearish US grain export data yesterday before taking in the January WASDE report today at 12 noon eastern.
“Character is the ability to carry out a good resolution long after the excitement of the moment has passed.” – Cavett Robert (American author)
Grain markets are quietly mixed this morning ahead of what is usually the biggest grain markets report of the year: the January WASDE.There was some bearish data that pushed the market lower yesterday though. The USDA’s grain export report yesterday showed that compared to last year, US corn exports are behind by 35%, soybeans are 14% behind, and total wheat shipments are tracking 7% behind last year’s pace.
The US Canola Association is ramping up its efforts to try and promote growing more of the oilseed in America.  Their main selling point is, “In the US, the ratio of supply versus demand of canola oil is about 1:4, which presents a huge opportunity.”
In our GrainCents 2018 canola market outlook, we discussed, in-depth, the potential of US canola acres and production, and what it means for prices.
Agriculture Canada says that soil moisture conditions in Western Canada have not changed that much since the fall.  What would you expect though when the Canadian Prairies only got about half of its normal precipitation in November and December? Without a bit of snow to insulate cropland, the extreme colds that we’ve seen the past few weeks can “freeze dry the soil and further deplete soil moisture reserves.”
In our GrainCents factors, we continue to monitor the potential price implications for spring wheat, as well as durum prices expectations. Considering the dryness that we saw this year, and that prices didn’t go into double digits like many were hoping, there are limitations to weather-induced price rallies. We cover where those limits might be in GrainCents.
French Wheat Exports Downgraded
FranceAgriMer recently updated its exports for French wheat exports.  The highlights include increase trade within the European Union to its highest in 12 years at 8.6 million tonnes. This would represent a 38% upgrade from 2016/17 exports of French wheat to other EU countries.
Outside of the bloc though is where things get fishy. So far in 2017/18, Reuters suggests that French wheat shipments to countries outside of the EU are just 3.8 million tonnes. 
FranceAgriMer also dropped its forecast for French wheat exports outside the EU to 9.3 million tonnes. However, we agree with a few other analysts that this number is too optimistic. After all, Russia has already exported 21 million tonnes of wheat so far, this 2017/18 crop year and shows little sign of slowing down.
Australia Just Lost 4.6 Million Tonnes of Wheat
The Australian Bureau of Statistics (ABS) came out this week and said that the 2016/17 Australian wheat crop was only 30.36 million tonnes.  While still a record wheat crop for Australia, it is not the official 35-million-tonne forecast pegged by ABARES or the 33.5 million-tonne harvest that’s been estimated by the USDA.
The biggest reason for the difference is in acres. ABS thinks that there were just under 29 million acres of wheat that got harvested in 2016/17. Conversely, ABARES pegged acres at 30.7 million acres. Tough to say if about 750,000 acres can produce 4.6 million tonnes of wheat or not.
On the other hand, Nidera, CBH Group, and Viterra are all indicating that the size of this year’s, 2017/18 wheat crop is bigger than once thought.
Most estimates of the 2017/18 Aussie wheat crop have been around 20-21 million tonnes, with the USDA at 21.5 million tonnes.
With the rumors suggesting a crop closer to 22 million tonnes, we’ll be acknowledging this in our GrainCents factors for both winter wheat and spring wheat.
Final Facts Heading into January WASDE
In yesterday’s Breakfast Brief, we reviewed all the key estimates going into today’s January WASDE grain report from the USDA.
Also, yesterday, in South America, CONAB raised its Brazilian soybeans production forecast to 110.4 million tonnes, up 1 million from their previous estimate.  This includes, Mato Grosso, the largest-soybean-producing state in Brazil, getting an upgrade of 655,000 tonnes for an 8.05 million-tonne crop. Comparably, AgRural maintained its highest-estimator title by upgrading its forecast from 112.9 million to 114 million tonnes of 2017/18 soybean production in Brazil.
Will we see the USDA match it today? On average, we don’t see the USDA update South American production numbers until February. It’s widely speculated that whatever increases are made to Brazilian production numbers will be offset by the losses in Argentina.
Rosario Grains Exchange offered its downgrade to the Argentine soybean crop, dropping their estimate by 2.5 million tonnes for a 52 million-tonne harvest in 2017/18. Quite a side note: weather forecasts for the next five days show decent rains across about three-quarters of Argentina.
For exports, CONAB pegged 2017/18 soybean shipments out of Brazil at 65 million tonnes, a bit behind the 68.15 million tonnes shipped out in 2016/17.
On the flipside of this, Chinese soybean imports in December hit 9.55 million tonnes, up 10% from November and 6% better than December’s 2016 imports. China’s total calendar year soybean imports came in at just over 95.5 million tonnes, a 14% jump from the 2016 calendar year.
In Tuesday’s Breakfast Brief, I mentioned there are some contrarian views going into today’s January WASDE. Now some other analysts are piping up similar ideas, mainly around US soybean yields. 
Regardless, there’s still quite a bit of soybean, corn, and wheat that will be left in the pipeline. This fact will put pressure on how far any grain price rally can run.
At 6:50 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2516 CAD, $1 CAD = $0.799 USD)
Mar Corn: +0.5¢ (+0.15%) to $3.493 USD or $4.371 CAD
Mar Soybeans: unchanged at $9.50 USD or $11.89 CAD
Mar Soybean Meal (per short ton): +$0.30 (+0.1%) to $313.40 USD or $392.24 CAD
Mar Soybean Oil (cents per lbs): -0.05¢ (-0.15%) to 33.10¢ USD or 41.43¢ CAD
Mar Oats: -0.8¢ (-0.3%) to $2.498 USD or $3.126 CAD
Mar Wheat (Chicago): +0.8¢ (+0.15%) to $4.408 USD or $5.516 CAD
Mar Wheat (Kansas City): +0.5¢ (+0.1%) to $4.408 USD or $5.516 CAD
Mar Wheat (Minneapolis): +0.3¢ (+0.05%) to $6.293 USD or $7.875 CAD
Mar Canola: -0.9¢/bu / -$0.40/MT (-0.1%) to $11.122/bu / $490.80/MT CAD or $8.887/bu / $391.83/MT USD
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