Grain markets are all in the green this morning despite doubts about more U.S. soybean exports going to China and ongoing geopolitical risk.
“Just remember, once you’re over the hill you begin to pick up speed.” – Arthur Schopenhauer (German philosopher)
When Will Soybean Exports Start to Pick Up?
Grain markets are all in the green this morning despite doubts about more U.S. soybean exports going to China and ongoing geopolitical risk. In this shortened trading week due to the Martin Luther King Jr. Day on Monday, the markets have been acted fairly volatile, mostly related to the impeachment proceedings in Washington and the extradition trial for Huawei CFO Meng Wanzhou in Vancouver.
Winter Wheat Prices Staying Elevated
While wheat prices have been fairly quiet, watching corn and soybean trade activity from the sidelines, Chicago wheat prices hit a new 18-month high and this morning, are now sitting about 25 cents/bushel away from a new five-year high. Cold weather in the U.S. southern Plains and labour strike sin France have helped push wheat prices higher.
On the latter, French rail and port services have been severely disrupted as a monthly-long public transport strike have left a lot grain shipments just sitting around in a backlog.  This could open the door for buyers to switch purchases to other origins like the U.S. or Canada. It’s worth noting that already, U.S. wheat exports (of all types) are sitting at nearly 15 MMT through Week 32, up about 16% from the same week a year ago.
We know that Algeria has bought less cereals – including durum – by about 14% compared to a year ago through November.  Also a bumper barley harvest helped reduce barley imports by more than half to less than 100,000 MT.  This is mainly attributed to their bigger-than-expected harvest this past year, as the country continues to focus on self-sufficiency, especially in durum wheat production, something we noted back in April 2018. That said, Turkey is helping cover the difference, buying more durum from Canada than they have in years past.  Contextually though, average cash durum prices in Western Canada remain stuck around that $7.50 CAD/bushel level.
So….When Will Soybean Exports Pick Up?
There continues to be doubters about the trade deal signed last week between China and the U.S. as the timing of increased purchases is very much up in the air, especially as the Brazilian soybean harvest starts pick up speed. However, the soybean harvest is only about 2% so far, according to AgRural, behind the 6% a year ago.  Nonetheless, buying by China (and other countries) of Brazilian soybean exports will certainly pick up over the next few weeks, as they usually do around this time of year.
This in mind, U.S. 2019/20 soybean exports through Week 19 are tracking 24% higher year-over-year with 23.24 MMT sailed so far. On the flipside, it’s worth mentioning that Canadian 2019/20 soybean exports are only at 2.11 MMT through Week 23, down 35% year-over-year. This is largely due to the smaller Canadian harvest, which is also weighing on Canadian soybean crush volumes compared to a year ago.
Bottom line though here is that, with soybean prices dropping 13 cents on the futures board in Chicago yesterday, there is still a lot of pessimism when China will pick up its American soybean exports buying. Put another way, the bulls are hanging tough waiting out for the confirmation of more soybean exports purchases. But should we be this pessimistic about soybean exports picking up? Ray Grabanski of Progressive Ag Marketing made some solid mathematical points this week that by August 1, corn prices should touch $4.50 and soybean prices should eclipse $10.75, if not $11.  John Payne of Daniels Trading thinks though that China will start to purchase more U.S. soybean exports in February. 
All things being equal, I can’t summarize the situation of China buying more American soybeans than Jon Hilsenrath of the Wall Street Journal did: “The U.S. and China have ended up in an odd position. China, a one-party state with communist roots, insists that market forces determine the outcome of its purchase commitments. Meanwhile the U.S., a voice for capitalism, depends on massive state intervention to meet purchase commitments.” 
Combyne: Our New Cash Grain Marketplace
As a final note, yesterday, all FarmLead users were introduced to our newest cash grain trading tool, Combyne. This new cash grain marketplace is built on a combination of trust, communication, and expanding one’s grain trading partners. One prescient farmer that I spoke to yesterday in Brandon at the Manitoba Ag Days show called it a combination of LinkedIn and Whatsapp for cash grain trade. I’d say that this claim is pretty spot on!
For context, we’ve been beta testing this tool for the last 7 months in a few select markets and the response on it has been extremely positive with exponentially higher activity levels. With the Combyne grain marketplace, we’ve removed as many hurdles as possible to truly live our mission of making cash grain trade easier. The main features of our updated cash grain marketplace, Combyne, are:
- You know who’s on the other side of the deal upfront (versus anonymous on our first generation marketplace);
- You can build your trusted trading network by connecting with current Combyne users or inviting your trading partners and they should join Combyne too because,
- Make phonecalls directly from the Combyne Android or iOS mobile apps to your connections to finalize deal terms faster.
- No connection or transaction fees! We’ll introduce some premium features (i.e. historical pricing, suggested Connections, supply/demand data, etc.) at a later date but you’re not going to pay FarmLead to do business with people who you already do business with! That’s why using Combyne is free!
- Decide if you want your Bid to buy or Offer to sell is shown to the public marketplace, or keep it private and only show it to your trusted network.
- As was the case with our first marketplace, Combyne does not take title in any grain transaction, allowing you to focus on your grain trading relationships only. Further, payment and transport of the grain remains you and the other side of the deal but we’ll continue to do credit checks via our partner Dun & Bradstreet on every buyer to show you if their financially-verified by us our not.
Over the next few weeks, while you will still be able to access your account, our first generation grain marketplace will be shut down. If you’re a Breakfast Brief reader, not to worry, you’ll continue to receive it! There are 3 simple steps to be successful with this Combyne: (1) set up your Combyne account today, (2) post a Listing for your network and/or the public marketplace to see, and then (3) start building your Combyne network by inviting your current trading partners and connecting with new ones already using Combyne.
At 7:35 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3085 CAD, $1 CAD = $0.7643 USD)
Mar Corn: +1.8¢ (+0.45%) to $3.893 USD or $5.093 CAD
Mar Soybeans: +3.5¢ (+0.4%) to $9.195 USD or $12.031 CAD
Mar Soybean Meal (per short ton): -$0.30 (-0.1%) to $298.80 USD or $390.97 CAD
Mar Soybean Oil (cents per lbs): +0.45¢ (+1.35%) to 33.20¢ USD or 43.44¢ CAD
Mar Oats: -1¢ (-0.3%) to $3.138 USD or $4.015 CAD
Mar Wheat (Chicago): +8.8¢ (+1.5%) to $5.903 USD or $7.723 CAD
Mar Wheat (Kansas City): +1¢ (+0.2%) at $5.01 USD or $6.555 CAD
Mar Wheat (Minneapolis): +3.3¢ (+0.6%) to $5.655 USD or $7.399 CAD
Mar Canola: +6.1¢ (+0.55%) to $10.875/bu / $479.50/MT CAD or $8.311/bu / $366.46/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.