Jan. 11 – Drop It Like It’s Hot?

FarmLead Breakfast Brief

Wednesday, January 11th, 2016

“A little and a little, collected together, becomes a great deal; the heap in the barn consists of single grains, and drop and drop make the inundation.”
– Saadi (Persian poet)

Good Morning!
At 7:10 AM CDT in the North American futures markets (*not cash prices*):

(all prices in dollars per bushel unless otherwise indicated)

$1 USD = $1.3242CAD, $1 CAD = $0.7552 USD)

Mar Corn: -1.3¢ (-0.35%) to $3.57 USD or $4.727 CAD
Mar Soybeans: -1.8¢ (-0.15%) to $10.12 USD or $13.40 CAD
Mar Soybean Meal (per short ton): -$1.30 (-0.4%) to $316.20 USD or $418.70 CAD 
Mar Soybean Oil (cents per lbs): +0.07¢ (+0.2%) to 35.71¢ USD or 47.29¢ CAD 
Mar
 Oats: +0.5¢ (+0.2%) to $2.27 USD or $3.006 CAD
Mar Wheat (Chicago): –3.8¢ (-0.9%) to $4.23 USD or $5.601 CAD
Mar Wheat (Kansas City): -4¢ (-0.9%) to $4.343 USD or $5.75 CAD
Mar Wheat (Minneapolis): -1.3¢ (-0.2%) to $5.60 USD or $7.415 CAD
Mar Canola: unchanged at $8.564/bu / $377.60/MT USD or $11.34/bu / $500/MT CAD

Yesterday’s Winnipeg ICE Close

Mar Barley: unchanged at $2.335 USD or $3.092 CAD
Mar Milling Wheat: -2.7¢ (-0.4%) to $4.912 USD or $6.505 CAD

Perhaps it’s time to post a bit of your grain on FarmLead?

Drop It Like It’s Hot?

Grains this morning are in the red as the markets pull back from its gains the last 2 days, mainly fueled by South American weather concerns. Tomorrow we get the USDA’s January template of their agricultural supply and demand estimates (nice preview here from DTN’s Darin Newsom). The January report tends to bring some fireworks and so the things we’ll be watching for are revisions to US soybean yields & U.S. ending stocks, U.S. corn and soybean exports, and South American production and export estimates. With the majority of South American weather concerns coming from Argentina again like they did in last spring’s rally, the Rosario Exchange dropped their estimate of the soybean crop there to 52.5M tonnes, well below the December forecast of 57M tonnes by the USDA. Will we see the USDA drop their estimates that aggressively? I don’t think so but you’d think that it has to come down a bit.

CONAB, Brazil’s USDA, raised their soybean estimate for this year’s crop to a record 103.8M tonnes (+8.8% year-over-year), up from their 102.5M-tonne call in December and the USDA’s current call of 102M tonnes (which could change in tomorrow’s WASDE report!). CONAB cited soybean area climbing 1.6% compared to last harvest and with timely rains in Mato Grosso, the largest-producing area, yields are expected to be up more than 10% in the region alone (more specifically, the state of Mato Grosso is expected to produced a record 29M tonnes, up 12% year-over-year despite acres up only 1.3%). Corn acres are also forecasted higher by CONAB by, leading them to increase their production forecast to 84.5M tonnes versus 83.8M last month, but still below the USDA’s 86.5M tonne-call.

CONAB also raised Brazil’s wheat import expectations to nearly 6M tonnes, a contrast to their call in December that they would import only 5.1M tonnes, the lowest since the mid-1990s. The increase in imports comes as the final 2016 harvest production number is being pegged by CONAB at 6.7M tonnes. The good news is that next-door-neighbour Argentina has roughly 14-15M tonnes of production coming off, which is why 1.67M tonnes of wheat has already flowed across the border into Brazil in the August-December period, along with 1M tonnes of US supply. Speaking of wheat imports, India has imported roughly 1.5M tonnes of Ukrainian wheat in the July – December 2016 period, or the equivalent of about 14% share in the first half of Ukraine’s export season, and the largest volume that Ukraine’s ever shipped to India.

On that note, this week the Indian government announced that they are trying to make the country more self-sustainable when it comes to pulse crops (AKA rely less on imports) and one state, Madhya Pradesh is aiming to boost production by 60% in the next 3 years! This means that they would go from the current 5M tonnes they produce annually to nearly 8M tonnes, taking more acres away from wheat and rice which are supported through minimum support pricing programs from the government. That being said, it may be hard to argue against this state reaching their 60% target as Madhya Pradesh has seen 18% farm growth annually versus 4% on the national level, mainly thanks to new wells and a focus on micro-irrigation! Overall, as we continue to chat with farmers at the Western Canadian Crop Production Show in Saskatoon, SK this week (find our booth here), we continue to hear more chatter of less durum acres, more canola, and pulse acres not dropping as much as everyone thinks they might.

Accordingly, we’re looking for new crop #2 or better small reds close to the 30 cent / lbs handle, #2 large greens near in the low 40s cents / lbs, and new crop yellows in the mid-$7/bushel, all with an Act of God clause. Get proactive (versus reactive) with your grain marketing and post your new crop deal on FarmLead today.

To growth,

Brennan Turner

President/CEO | FarmLead
1-855-332-7653 (Toll-Free)
www.FarmLead.com
@FarmLead (on Twitter)

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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