Sept 26 – Grain Markets Eye Wetter Harvest 2018

Good Morning!

Grain markets this morning are mostly in the green is a complex is factoring in some less-than-ideal harvest weather across North America.

“Some people feel the rain. Others just get wet.”- Bob Dylan (American Musician)


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Grain Markets Eye Wetter Harvest 2018

Grain markets this morning are mostly in the green is a complex is factoring in some less-than-ideal harvest weather across North America.

As Garrett recapped in Monday’s Grain Markets Todaywheat prices were able to find some gains off technical buying, but the market was starting to look more closely at the harvest numbers for corn and soybeans. As the forecast for the next week to 10 days got wetter yesterday, it’s likely that harvest and Plant 2019 for U.S. winter wheat fields will be stalled.

Grain markets are pricing in a faster winter wheat planting pace

Yesterday, wheat futures continued to slide as the USDA said that 28% of the U.S. winter wheat crop already planted is 2 points ahead of the 5-year average of 6 points ahead of last fall’s pace. While corn prices gained yesterday on harvest concerns, strong U.S. soybean exports helped boost prices in Chicago, as well as Canadian canola prices.

Grain Markets Reports This Week

This morning, we got Statistics Canada’s numbers for August 2018 crush volumes of canola and soybeans in the Great White North. It showed that just under 743,000 MT of canola was crushed in August. This is up 18% year-over-year but down 11% from July 2018’s 838,000 MT crushed. Keep in mind that August 2017’s numbers saw a 16% drop from its previous month.

For our GrainCents readers, we’ll be digging into the StatsCan crush report, and their delivery of major grains in August. 

On Friday, we’ll get the USDA’s Small Grains and Quarterly Stocks report. For the latter, the numbers are expected to be relatively bearish with inventories as of September 1 still too big to be bullish. [1]

The Elephant in the Room

On the geopolitical risk front, despite ongoing talks this week at the UN in New York City, there seems to be no progress on NAFTA. That being said, it appears that Canada is trying to hold up some talks with China, it’s second-largest trading partner. [2] This is an attempt to try and preserve relations with the People’s Republic as the rest of the world is seemingly being asked to pick sides as to who will they back in a World Trade Organization dispute.

Regardless, it’s getting hazy even for grain traders. Cargill CEO, David McLennan, says that he’s concerned for the U.S. agricultural economy in the long term if the trade dispute doesn’t get solved soon. [3]

Further, the CEO and CFO of Louis Dreyfus resigned yesterday, as its expected that they’re going to report some less-than-stellar earnings. [4]

As it stands, there is a serious game of musical chairs going on in the soybean trade, thanks to the Chinese-U.S. trade war. Since there’s little-to-no soybean export activity out of North Dakota expected, this means more soybeans could be coming into Canada, and thus, more soybeans will be going to Canada from the U.S.

There are also rumors that Brazil will import about 1 MMT of U.S. soybeans in the next few months to meet its own demand needs (they’re basically out). [5]

Apart from the harvest weather, most of the grain markets’ focus is on whether or not trade talks between the US and China will resume. Best guesses are, based on the information we have today, that’s probably not happen.

To growth,

Brennan Turner

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

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