Grain markets are all in the red this morning as the complex starts to consider Plant 2020 expectations, and soybean exports (or the lack thereof).
“I learned at an early stage that the most important thing I could do for my players was to give them the tools necessary to beat their opponent.” – Bobby Knight (American college basketball coach)
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Early Plant 2020 Expectations (Maybe Too Early?)
Grain markets are all in the red this morning as the complex starts to consider Plant 2020 expectations, and soybean exports (or the lack thereof). Moreover, the sentiment from last week of concerns over the coronavirus continue to push investors to the sidelines. That said, considering where grain markets are this morning, we might see some buying of the dip/on these lows.
On an extremely unfortunate note, we lost a couple legends this weekend. First, Disruptive Innovation author Clayton Christensen passed away and his comments/teachings on the innovation economy will be surely missed (including by me).  Second, one of the all-time basketball greats, Kobe Bryant, passed away in a tragic helicopter accident in Los Angeles, alongside his 13-year old daughter and 7 other individuals.  May they rest in peace.
Could Plant 2020 Be Influenced by Soybean Exports?
Another week came and passed without any significantly higher soybean exports to China. As a result, investors are getting a little less bullish without an increase in soybean exports, something I mentioned last week was likely to happen. In Friday’s CFTC report, managed money increased their net short again, although it is worth mentioning that Friday’s report of grain exports showed sales of 910,700 MT for soybean exports, in line with the market’s expectations. In terms of actual shipments, through Week 20, U.S. soybean exports have totalled 24.22 MMT, up 23% on the year.
As I mentioned in my outlook for soybean prices, U.S. soybean acres are supposed to climb in 2020, but moreso from a rotational perspective and not necessarily a reflection of market conditions.  Intuitively, this means that corn acres will drop a little, although I should sat that concerns remain about the carryover moisture profile of fields, given last year’s extremely wet spring.  That said, a first estimate of Plant 2020 soybean acres in the U.S. was for 84M acres, albeit some private estimates are closer to 86M. For context, 2019 soybean planted acres were initially pegged at 81M but Prevent Plant acres of 4.5M dropped actual acreage down to 76.5M. 
Plant 2020: Early Canadian Expectations
Late last week, Agriculture Canada released its first estimates for Plant 2020 and it was highlighted by their expectations of less canola and more wheat (notably both durum and non-durum wheat).  More specifically, Agriculture Canada is expecting canola acres to drop by about 450,000 to 20.51M, the smallest area since the 2013/14 crop year.
One notable from the table above include oats increasing by quite a healthy amount, although I think Agriculture Canada’s number may be low based on the conversations I’ve been having. With brown flax prices hovering in that $13 – $14 CAD/bushel range, it’s expected that flax acres for Plant 2020 will climb back above the 1M acre mark. That said, Agriculture Canada continues to expect strong demand, and so, their forecasting ending stocks to stay below 100,000 MT at 80,000 MT, which would be a 46% drop from the five-year average.
Also worth noting from Agriculture Canada’s monthly forecast is that 2019/20 canola ending stocks were stayed at 3.5 MMT. This despite, the Canadian Grain Commission revising its domestic crush numbers by about 300,000 MT lower, to about 700,000 MT above last year’s pace, not the 1 MMT that was erroneously reported previously.  We might need to give Agriculture Canada the benefit of the doubt here as they probably couldn’t revise their numbers so quickly before they published so I’m expecting some changes in their February estimate.
That said, new crop 2020 cash canola prices are sitting about $10 – $15 CAD/MT below where they were a year ago. This is largely due to futures prices on the November contract being about $11 CAD/MT lower year-over-year. Keep in mind as well that new crop canola prices one year ago were not yet dealing with the fallout from China in terms of export licenses. This ultimately begs the question if whether that additional Chinese demand is worth just $10 CAD/MT or not.
Worth noting that, while the extradition hearing for Huawei CFO Meng Wangzhou is going on, if she is freed and heads back to China, it doesn’t guarantee any increase in canola exports to the People’s Republic.  For context, Canadian 2019/20 canola exports are tracking 9% behind a year ago, with 4.2 MMT sailed through Week 24.
On a 39-year basis, David Reimann from Cargill program says that when looking at locking in some new crop canola prices, the April-June calendar quarter is the best time frame to do so.  I’d have to agree with him, albeit it’d get a bit more specific: the highs of canola prices during the Q2 quarter the past few years has usually been seen in the last 10 days of May or the first 10 days of June. That said, as you think about Plant 2020, you cannot forget to be cognizant of what new crop soybean prices are also doing.
Today’s Best Tip to Combyne
As mentioned a few times last week, we’ve released made our second-generation marketplace, Combyne, for anyone to use. As a reminder, your Combyne isn’t going to create value for you unless you have your current trading partners in there with you. Combyne is free to use, with no transaction/connection/subscription fees. The more people in your Combyne, the more in the know you can be of where you grain trading partners sit in terms of the next deal they’re looking to do. Invite your trusted partners through the Connections link on the mobile app or Combyne.ag website.
Due to some early morning travel, futures grain prices are not included in this morning’s Breakfast Brief but you can review them here at your convenience.
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.