May 8 – Putting Today’s Grain Markets in Perspective

Good Morning!

Grain markets this morning are mostly in the green as the complex tries to rebound from yesterday’s sell-off.

“The only thing you sometimes have control over is perspective. You don’t have control over your situation. But you have a choice about how you view it.” – Chris Pine (American actor)

graincents-trial

Putting Today’s Grain Markets in Perspective

Grain markets this morning are mostly in the green as the complex tries to rebound from yesterday’s sell-off.

As recapped by our Garrett Baldwin in his regular afternoon article, Grain Markets Today, profits were taken off the table, and grain prices plunged. Soybean prices in Chicago dropped by more than 25 cents USD /bushel, corn prices fell by more than 5 cents, and winter wheat prices lost about 15 cents.

This morning, winter wheat prices are in the red again, but everything else is in the green. Canola prices are leading the rebound as the Canadian Loonie is dipping closer to dropping below 77 cents USD. We recently looked at the impact of stronger oil values on canola prices and why it may have the edge over other oilseeds.

Time for New Crop Grain Sales?

One analyst says that you should start selling the new crop, thanks to grain markets being where they are. Brian Doherty from Stewart-Peterson specifically says, “With December corn prices breaching $4.15, November beans over $10.00, and July Chicago winter wheat prices above $5.00, one should view these price recoveries as opportunities to initiate new crop sales.”

In this past Sunday’s GrainCents Digest email, specifically for our GrainCents corn and soybean readers, we looked at the highs and lows of the market in years where US acreage decreased. Not including this year, over the past decade, there have been four years that soybean acres have fallen, and five where US corn acres have dropped.

Can you guess when the high price in the April to August time frame was seen for soybean and corn prices? What about the low?

This in mind, grain markets historically tend to appreciate over the May and June months as production concerns creep into the minds of the market makers. Should this year be any different?

For all our GrainCents readers, we timestamp our old crop and new crop sales. Try out a three-week trial and see where we’re sitting today for the crops that matter to you.

US Crop Progress Update

In yesterday’s Breakfast Brief, we talked about where the US crop progress report could land. Check out the results of yesterday’s crop progress report in the charts below:

2018-05-07-us-barley-planting-progress

us-corn-grain-markets-planting-progress

2018-05-07-us-soybean-planting-progress

2018-05-07-us-spring-wheat-planting-progress

2018-05-07-us-winter-wheat-crop-conditions

After Drought, Big Cereal Crops in Argentina?

While we know that drought conditions in Argentina have negatively impacted corn and soybean production numbers, what does it mean for their winter-seeded crops, wheat, and barley?

We recently dug into what the size of these crops could look like. Specific to the Argentina barley crop, production is set to climb 8% year-over-year to 3.5 million tonnes. Exports are expected to stay flat at about 2.2 million tonnes, with 1.2 million attributed to malt barley.

For the Argentina wheat crop, according to the USDA attaché in Buenos Aires, acres are expected to hit 15.3 million acres, up 9% year-over-year to an 11-year high.  Argentina wheat exports are expected to come in at a record 14.2 million tonnes, thanks to record production of 20 million tonnes. Read up on our deeper GrainCents analysis in the link above for why Argentina is becoming a cereal production force to be reckoned with.

The one downside Argentina’s farmers are dealing with is their currency. The Argentina Peso collapsed this past week, down 9% in just two days! Can you imagine the Canadian Dollar or US Dollar losing 9% in two days! The stock market would melt!

The main reason for the currency issues in Argentina is a proposed capital gains tax of 5-15% on foreigners. [1] This  led to an exodus of foreign capital, and to bolster the Peso, the Argentina central bank raised interest rates for the second time in less than a week! Twice in one week! Now, Argentina’s benchmark interest rate is 33.25%.

For perspective, the current US interest rate is 1.75%. In Canada, it’s 1.5%.

Also, don’t forget that the inflation in Argentina is running at 25% on an annualized basis. For perspective, if you held $1 for one year, the value of that dollar, a year later, in purchasing terms, would only get you 75¢ worth of goods.

As I suggested in my interview with Chip Flory on AgriTalk Radio last week, while we’re cognizant of stronger soybean prices in places like Brazil and Argentina, here in North America, we have the luxury of relatively stable governments, inflation, and currency moves. Thus, we don’t have to deal with so many wild and gregarious factors constantly affecting our grain markets.

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

At 7:00 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2963 
CAD, $1 CAD = $0.7714 USD)

Jul Corn: 0.3¢ (0.06%) to $4.010 USD or $5.198 CAD
Jul Soybeans: 6.3¢ (0.62%) to $10.178 USD or $13.193 CAD
Jul Soybean Meal (per short ton): $1.60 (0.42%) to $384.10 USD or $497.90 CAD
Jul Soybean Oil (cents per lbs): -0.01¢ (-0.03%) at 30.77¢ USD or 39.87¢ CAD  
Jul Oats: -0.8¢ (-0.34%) to $2.355 USD or $3.053 CAD
Jul Wheat (Chicago): -1.5¢ (-0.29%) to $5.100 USD or $6.611 CAD
Jul Wheat (Kansas City): -2.5¢ (-0.46%) to $5.370 USD or $6.961 CAD
Jul Wheat (Minneapolis): 1.0¢ (0.16%) to $6.113 USD or $7.923 CAD
Jul Canola: $2.30 (0.44%) to $11.957/bu / $527.20/MT CAD or $9.224/bu / $406.703/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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