Grain markets this morning are quietly mixed again, with oilseeds lower and wheat recovering some of its losses from the past few days as weather premium and export hopes pick up.
“We succeed in enterprises which demand the positive qualities we possess, but we excel in those which can also make use of our defects.” – Alexis de Tocqueville (French politician)
Grain markets this morning are mostly mixed, with oilseeds lower and wheat squeaking out some gains.
Nearby lean hog futures prices hit a contract high yesterday, thanks to colder temperatures and firms cash hog prices. This is positive for feed prices and continues to add to the factor of North American livestock herd size that we’re watching in GrainCents for corn prices.
While potentially positive, there are more than a few bushels of corn to work through: America’s corn-to-stocks ratio is pegged this year at 17.1%. This would be the largest ratio in more than a decade.
US President Trump has suggested that, with US mid-term elections and Mexico’s July 1st Presidential election in Mexico, he’s not in a rush to finalize a new NAFTA deal.
This feels like a slow-moving train wreck. Or, as our friend Shaun Haney of RealAgriculture.com may have put it best, “This has become the most uncomfortable wedding dance. We like each other and have differences, but we know family is important. The song is going on too long, but know we all have no idea how to get off of the dance floor without looking bad.” 
Watching Land, Not Paint, Dry
As mentioned over the weekend, wheat prices took a hit thanks to a pretty bearish WASDE report on Friday, most notably felt by the winter wheat complex.
Yesterday, I noted the potential impact of the dry conditions in Western Canada for both spring wheat and durum prices. The conditions are creating some serious acreage debates, especially with the likelihood of fewer pulses getting planted in the Canadian Prairies in 2018.
In the US, the latest US Drought Monitor says that more than half of the country is experiencing some drought or dryness.  This is intuitively a bullish headline, but we haven’t necessarily seen prices pop just yet (or at least recover from Friday and yesterday’s sell-off).
The lower North American wheat prices might again attract international buyers at these so-called discount levels. When we were sitting at the low $4s on the futures boards a few weeks ago, before Christmas, US wheat export activity picked up. This – and colder weather – helped fuel the rally seen at the end of the month.
Also supportive of US exports is the U.S. Dollar, which is now sitting at three-year lows against a basket of other international currencies.
While not won by the US, Egypt bought another 295,000 tonnes of Russian wheat yesterday. This brings Russia’s total wheat sales to Egypt in the 2017/18 season to 5 million tonnes or 80% of all of the GASC’s purchases. Thanks to the Russian ruble appreciating a bit, the price Egypt paid was $5 USD /metric tonne higher than last week’s purchase.
Soybean Prices Snap Higher on Crush Data
As Garrett noted in yesterday afternoon’s Grain Markets Today, soybeans prices had a positive day, thanks to a strong NOPA crush report. A little less than 165.4 million bushels of soybeans got crushed in December, which is about 1 million bushels more than what the market was expecting and 3.3% better than December 2016’s soybean crush volumes.
So far in 2017/18, soybean crush in the US has totaled 631 million bushels. This crush pace – a little more than 2% above 2016/17’s pace at this time a year ago – is in line with the USDA’s expectations of 1.95 Billion bushels getting used.
Soy oil took a bit of a hit yesterday, as American stocks in December of nearly 1.54 billion pounds was 157 million more than the market was expecting. It’s also 212 million pounds more than November and 105 million pounds more than December 2016.
There are two possible explanations for the higher stocks. The first is that there is more oil being extracted from crushed from this year’s soybean crop versus last. The second is that biodiesel use in December wasn’t as strong as the market expected.
This didn’t help canola prices, but we recently updated our expectations for canola sales in GrainCents, as well as flax.
Coming back to soybeans, the harvest in Brazil has started, albeit a little slower than the usual pace at this time of year. Rains have been the major factor to blame, but we’re not worried today, as it’s still early.
The implications will likely most felt in safrinha /second-corn crop production though. A delayed soybean planting campaign in Brazil intuitively means a slightly later harvest. This means a 2nd-crop Brazilian corn seeding schedule that’s potentially outside the ideal planting window.
That being said, Brazilian farmers have been known to show off that they can combine and seed at the same time.