Sept 7 – Grain Markets Uneasy Ahead of WASDE

Good Morning!

Grain markets are all in the red as the complex continues to have a losing first week of September. 

“Where there is no vision, there is no hope.” – George Washington Carver (American Inventor)

GrainCents grain markets analysis

Grain Markets Uneasy Ahead of WASDE

Grain markets are all in the red as the complex continues to have a losing first week of September.

Wheat prices continue to be the worst performer of the group. While down again this morning, Garrett recapped in his regular Grain Markets Today column that, yesterday, wheat futures lost 8 – 12 cents USD / bushel in Chicago, Kansas City, and Minneapolis exchanges.

Right now, there seems to be a lot of positioning for next week’s September WASDE from the USDA. We’ll be digging into all the pre-WASDE estimates on Sunday for our GrainCents readers first, but initial gut feelings are for some bearish soybean and neutral corn numbers. There is some optimism for wheat, but US exports have been fairly poor (whereas Canadian wheat exports are tracking about 2% ahead of last year.

Ag Disease Abounds

There’s been a lot of negative headlines in the ag industry. There are the obvious ones like glyphosate and neonics trying to be and, in some cases, successfully, banned.  

Then there are a few others that are causing some concern with supply and demand tables.   

In China, there have been suggestions of wider pork bans to cull the spread of African swine fever. [1] The UN’s Food & Agriculture Organization is making recommendations to control the deadly virus, which doesn’t harm humans, but can be 100% fatal for pigs.  

In Iowa, sudden death syndrome has hit the soybean crop, and “rain has taken a toll  on even the best nitrogen programs.” [2] 

In Western Canada, clubroot in canola fields is becoming more commonplace, with a record number of cases likely this year. [3] 

I don’t think that there’ll be a production shortfall in either of these two crops this year, but it’s obviously something that’s getting more attention, especially when it starts getting press in the mainstream media. 

Canadian Grain Stocks Report

Yesterday, StatsCan released its estimates of how much grain was left on-farm and in commercial storage as of July 31, 2018. The most notable bearish year-over-year changes we saw were in total canola, lentils, and peas inventories, up 78%, 178%, and 117% respectively.

Grain-markets-Total-Canola-Stocks-StatsCan-July-2018

Conversely, the most bullish numbers from StatsCan were seen in barley, flax, and rye, down 41%, 47%, and 37% respectively compared to July 2017.

Canadian barley exports so far this year are tracking fairly slow, down 55% year-over-year, as per the most recent report from the Canadian Grain Commission.

2018-09-02-CGC-Barley-Exports-Cumulative

Making Sense of These Grain Markets Yet?

With harvest pressures, yield estimates, trade issues, and more all affecting grain markets right now, it can be tough to keep track of it all, especially when you’re busy in the field.

This is why we started GrainCents: clear out the noise in the grain markets, so it’s easier to make sense of it all. Each of the 12 crops that we provide detailed coverage on – corn, soybeans, canola, flax, winter wheat, spring wheat, durum, oats, barley, peas, chickpeas, and lentils – goes through what’s impacting that specific market that week, as well as what we’re watching for in the weeks and months to come.

Right now, there are varying yield estimates for what’s coming off the fields. That’s why we’re breaking this down and looking at all the estimates in one spot and comparing them to last year and the 5-year average. For example, here’s the range of pea yields in Alberta and Saskatchewan that we’ve seen in the past few weeks.

Varying-2018-Canadian-Pea-Yields

You’ll notice that the September 2018 pea yields estimate for Alberta is missing as that’s coming out later this afternoon in this week’s Alberta crop report.

At GrainCents, we get into this level of detail, package it all up, and determine if prices are undervalued (which means to wait for a better price) or overvalued (which means it is time to sell).

The export and stocks charts and the yield tables that you’ve seen in this morning’s Breakfast Brief are replicated for all crops that we cover.

Heading into the weekend, join us for this week’s GrainCents Digest, emailed out every Sunday morning at 8 AM EST. This week’s GrainCents will also include a look at what we’re expecting to see in next Wednesday’s September WASDE report from the USDA.

To growth,

Brennan Turner

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

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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