Jan 19 – Fresh Eyes

FarmLead Breakfast Brief

Thursday, January 19th, 2017

“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”
– Marcel Proust (French writer)

Good Morning!
At 6:55 AM CDT in the North American futures markets (*not cash prices*):

(all prices in dollars per bushel unless otherwise indicated)

$1 USD = $1.3268 CAD, $1 CAD = $0.7537 USD)

Mar Corn: +0.5¢ (+0.15%) to $3.655 USD or $4.849 CAD
Mar Soybeans: -1.5¢ (-0.15%) to $10.735 USD or $14.243 CAD
Mar Soybean Meal (per short ton): -$1.60 (-0.45%) to $349.50 USD or $463.71 CAD 
Mar Soybean Oil (cents per lbs): –0.02¢ (-0.05%) to 35.56¢ USD or 47.18¢ CAD 
Mar
 Oats: +1.3¢ (+0.5%) to $2.583 USD or $3.426 CAD
Mar Wheat (Chicago): -2¢ (-0.45%) to $4.29 USD or $5.692 CAD
Mar Wheat (Kansas City): -1.5¢ (-0.35%) to $4.508 USD or $5.98 CAD
Mar Wheat (Minneapolis): +3.3 (+0.55%) to $5.768 USD or $7.652 CAD
Mar Canola: +5.2¢ or +$2.30/MT (+0.3%) to $8.848/bu / $390.12/MT USD or $11.739/bu / $517.60/MT CAD

Yesterday’s Winnipeg ICE Close

Mar Barley: unchanged at $2.294 USD or $3.005 CAD
Mar Milling Wheat: +16.3¢ (+2.55%) to $4.923 USD or $6.532 CAD

How much of a rally do you need before posting a target?

Fresh Eyes

Grains this morning are quietly mixed as the trade pares down on a stronger U.S. Dollar just 1 day ahead of Donald Trump’s inauguration as the President of the United States of America. Canola climbed again yesterday on the back of a lower Canadian Dollar (which fell almost a full cent yesterday on the suggestion the Bank of Canada may cut interest rates again), but also thanks to the lingering effects of Argentinian flooding issues. Soybeans traded relatively sideways as it seems that China isn’t necessarily buying up the rally, rather letting markets work through the rumours that Argentina will only produce 50-52M tonnes, likely knowing that both Brazil’s increase in production and an increase in North American acreage in 2017 will make up for any losses. If anything (and as I’ve mentioned already this week), international buyers of soy oil and soymeal may turn to the likes of the U.S. for those products as with less to process in Argentina, buying eyes have to take a fresh look at other sourcing options.

Speaking of sourcing, China has started cancelling cargoes of ethanol as expectations for ethanol import tax will rise to 30% as Beijing looks to build up their domestic industry, instead of sourcing from afar. In similar thinking, a new pea processing plant has been announced by French food ingredient company Roquette for Portage la Prairie, MB, suggesting some buzz more investment for value-add processing will stay in Canada versus grain just being shipped to the ports and exported out. That being said, the $400M CAD facility is expected to be completed by 2019 and will be able to process 100,000 MT of peas per year.

On that note, we continue to see some strong new crop pricing of new crop yellow peas available (+$8 CAD / bushel handles bid in a lot of places on FarmLead) that should be considered, especially since Act of God clauses are available. One thing to note is that as we get closer to India harvesting its rabi crop (which will start in about another 6 weeks), the more aggressive negative pressure will see on new crop pulse pricing as the market then knows there’s available supply to source from. Obviously, it would ignorant to suggest that the rabi crop is in the bin but conditions continue to be relatively favourable and so we’re just cognizant of the likelihood of upside potential versus the impending downside risk (something you should weigh for all crops that you’re growing).

Just 2 days before his inauguration, President-Elect Donald Trump has tapped former Georgia Governor Sonny Perdue as the new US Secretary of Agriculture. Perdue has been running a trading company in Atlanta since he left politics in 2011 so most political analysts are optimistic that the leader of American Ag will continue to push Trump on trade, including potentially swaying support for the Trans-Pacific Partnership, a massive trade agreement Trump has continued to suggest he will not sign. Staying in the politics, new EPA boss, former Oklahoma Attorney General, Scott Pruitt, said at his Senate confirmation hearing that it was too early to determine if the renewable fuels standard (AKA ethanol mandate) needed to be reworked or not. What we do know is that Carl Ichan, activist investor and staunch critic of the RFS was recruited by The Donald as a special adviser on regulations, suggesting fresh eyes are going to take some long looks at the status quo.

It’s our last day in Brandon, MB at the 2017 Manitoba Ag Days show! Come chat with us in the Westoba Concourse about new crop pricing and the awesomeness of the new FarmLead mobile app.

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.

Most Recent Posts
Dec. 10 - Grain Markets Reverse Ahead of WASDE
December 10, 2018 Brennan Turner
Grain markets this morning are mostly lower ahead of tomorrow’s December WASDE report, with wheat prices the most notable, pulling back from its significant gains on Friday.
October 4: Corn Prices Edge Higher With October WASDE in Focus
October 04, 2018 Garrett Baldwin
Corn prices ticked higher Thursday as traders and analysts began to speculate on next week’s release of the October WASDE report.