Grain markets this morning are mostly in the green in a bit of a risk-off feeling with the US Dollar slightly slower, and equity markets higher.
“This search for what you want is like tracking something that doesn’t want to be tracked.” – Fred Astaire (American entertainer)
Grain markets this morning are mostly in the green in a bit of a risk-off feeling with the US Dollar slightly slower.
With the winter trade show season in full-tilt, we continue to here more buzz about when India’s going to remove its pulse crop import taxes. I addressed these speculative discussions, specific to each of the three major pulses yesterday in GrainCents – peas, lentils, and chickpeas.
Bigger Global Corn Stocks
As Garrett mentioned yesterday in Grain Markets Today, wheat prices closed higher again, thanks to the International Grains Council lowering their forecast for next year’s 2018/19 global production forecast. Compared to this year’s, 2017/18 crop of 757 million tonnes, the IGC is expecting wheat producers around the world to take off 742 million tonnes in 2018/19.
The bigger surprise was the IGC raising global corn ending stocks by 50%.  Specifically, in their November update, the IGC pegged global inventories at the end of 2017/18 at 206 million tonnes. Yesterday, they increased their number to 322 million tonnes.
I re-read it about three times as well. I literally didn’t believe Garrett when he told me and I didn’t until I read the report myself.
The reason for the big uptick is China’s state buying program helping corn reserves in the People’s Republic balloon up above 250 million tonnes! Most will point to China’s new ethanol mandate as the reason for the spike, but we continue to think this is just noise (and as extensively reviewed in GrainCents here).
Ukraine’s Rapeseed Exports Impress
Ukraine’s rapeseed exports this year are exploding.
So far in 2017/18, 2 million tonnes of the European oilseed has been shipped out of Ukraine, more than double the 900,000 tonnes shipped out by this time a year ago. And this is off a 2017/18 harvest that was just 2.2 million tonnes in size.
While I mentioned in yesterday’s Breakfast Brief the issue that palm oil is now facing in Europe, I dug into what this potentially means for rapeseed / canola prices for our GrainCents canola readers.
I also explored what the pace of Ukraine’s rapeseed exports means for competitors like Australia and Canada who are trying to gain market share in the EU. As a hint, the Ukraine government has changed some regulations recently.
Staying in Ukraine, 22.8 million tonnes of all grains have been exported so far this 2017/18 crop year. That’s down more than 9% from the pace set by this time a year ago. The Ukrainian Ag Minister blamed transportation for most of the export decline year-over-year.
Export volumes so far include 11.7 million tonnes of wheat (-5% year-over-year), 3.8 million tonnes of barley (-14% YoY), 1.6 million tonnes of soybeans (+7% YoY), and 8 million tonnes of corn (-16% YoY).
UkrAgroConsult actually cut their forecast for total Ukrainian corn exports to 19 million tonnes, mainly because of more South American competition. This is well below the USDA’s current forecast for Ukrainian corn exports of 20.5 million tonnes.
All Eyes on Argentina?
No “good” rains are In the forecast for Argentina until next weekend. In the meantime, spotty shores are indeed expected, with anywhere from 0.2 to 0.8 inches falling. Looking further, the below-average precipitation trend is expected to continue into early February.
Intuitively questions are being asked about the germination of the corn and soybean crops currently getting planted. Private analyst Bolsa recently dropped its Argentina 2017/18 corn production estimate to 39 million tonnes.
Comparably, the USDA didn’t change its estimate of the 2017/19 Argentine corn crop last Friday in January’s WASDE, keeping output at 42 million tonnes. The market was expecting something closer to 41.5 million tonnes.
On the soybean front, most private estimates of the 2017/18 Argentine crop are now sitting between 52 and 53 million tonnes. The USDA did drop their forecast by 1 million tonnes in the January WASDE to 56 million tonnes, but that’s still obviously a big bigger than the private world.
Garrett spent yesterday taking a deep dive via GrainCents into Argentina’s soybean production estimates and their changes over time. While the USDA’s attache in Argentina says not to worry about the soybean crop there, Garrett looks into their historical “don’t cry wolf” assessment.
The 2018 Acres Debate Continues
A recent poll by Farm Futures show of nearly 1,000 American growers should that they’re not expecting too much to change in corn and soybeans in 2018/19. 
What’s clear though is that soybean acres are indeed going up, forecasted at 90.1 million acres. This would match the 90.1 million acres of corn that the survey respondents also think will get planted.
Sidenote: We put out our own Twitter poll last week, asking if US soybean acres would be above OR below 91 million. 54% said above, 46% below.
On the wheat side, it looks like more spring wheat is going into Americans oil in 2018/19. Specifically, 11.8 million acres is being forecasted, a climb of nearly 7% year-over-year. Durum acres were also estimated at 2.4 million, up 5% year-over-year. This durum number is slightly more than the number I pegged in my GrainCents 2018 Durum Market Outlook.
We were surprised by last week’s winter wheat acres of 32.6 million that the USDA put out to the market. All told, combined with winter wheat, this would be total US wheat acres at 46.8 million, up almost 2% year-over-year.
Reminder: We have more than 2 months before the USDA puts out its Planting Intentions on March 30th.
Have a great weekend and if you’re a GrainCents subscriber, look for our weekly digest email tomorrow morning!
Due to travel, there are not futures markets data in today’s Breakfast Brief but you can review them here.
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.