In today’s Breakfast Brief, we discuss being proactive in your grain marketing strategy, the outlook of North American crops, and what’s going on with barley demand.
“History is a relentless master. It has no present, only the past rushing into the future. To try to hold fast is to be swept aside.”
– John F. Kennedy (35th US President)
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Grains this morning are all higher (basically back to where they started yesterday morning) as the market is trying to rebound from a red week, amidst a vote next week to see if the U.K. leaves the E.U. or not (AKA the “Brexit” vote). As the market continues to watch the skies for rain and thermometers for temperatures, Drew Lerner of World Weather Inc. says that commercial forecasters are beating the “drought drum” too loudly and that talk of a devastating La Nina drought this summer in North America is overblown. Given this commentary from one of the best of the best when it comes to weather analysis, we believe it’s important to be proactive and have something on the books to move so you have both bin space and cash available ahead of harvest (unless you’re in a position that you don’t need it of course!)
Recall year’s past where you rushed to move product ahead of harvest or even this past February/March when you wanted to get something in before road bans – instead of rushing and settling for a potentially less-than-optimal price, let’s get something posted on the FarmLead Marketplace for that June/July delivery.
Grain Quality Looking Up!
Grains got pushed lower again yesterday thanks to a stronger U.S. dollar and continued favourable outlooks for crops across North America with a combo of good rains and sunshine. Even at our booth in Hall 9 at Canada’s Farm Progress Show in Regina, SK, there’s not many producers we’ve talked to who haven’t said crops are looking good where they farm in Alberta, Saskatchewan, Manitoba, Montana, and North Dakota (and the government reports are backing that up)!
While the the NOAA’s extended forecast continues to show some warmer-than-average temperatures, the aforementioned timely rains are limiting the weather premium that has been built in over the past couple weeks. This would strike out 1 of the 3 catalysts for the recent rally, with one of them being the funds rally and the other being the demand shift to America.
Although Strategie Grains left its forecast for the 16/17 EU crop unchanged at 146.7 million metric tonnes (151 million metric tonnes last year), German and French crops were dropped by 1.3 million metric tonnes but were offset by an increase of 1.3 million metric tonnes in Eastern and Southern European regions, including Romania & Spain. Obviously the drop in France and Germany though coincides with a likely decline in quality, which could limit exports (i.e. soft wheat or durum into North African states, opening the door for North American business). That being said, Marlene Boersch of Mercantile Venture points out that Morocco’s soft wheat import duty was bumped to 65% from 30% for until August 15th, despite their domestic production coming in under 3 million metric tonnes this year, versus a 8 million-tonne crop last year. Next door in Algeria, soft wheat imports in 1Q2016 are seen at 2.17 million metric tonnes (+2.4% year-over-year) while durum imports dropped by 2.3% over the same period to 665,000 tonnes.
What’s also lower year-over-year is the number of barley exports out of Russia, down 16% year-to-date with just 4.11 million metric tonnes shipped out of country. In Canada, barley demand seems to be covered for now as on the feed side, many buyers are bought up for the summer months ahead of new crop deliveries (which will likely be early given the early start to Plant 2016 – if you’ve got some barley still in the bin, again, we would recommend posting it today on FarmLead). On the malt side of things, buyers are mostly covered through new crop and production contracts are sitting in the low $5/bushel range, mainly thanks to total Canadian barley acres up 4.6% YoY to 6.8 million acres.
Pulse demand continues to be strong through albeit we’re very cognizant of the good start to this year’s growing season in Canada, better rains in Australia, and the large increase in acres in Europe, Russia, and the U.S.. Nonetheless, demand will continue to support levels where we’re at today, it not higher through a fall export program as a rush to move product will be on.
Have a great weekend and with the theme of today’s Breakfast Brief, we’ll leave you with Alabama’s “I’m In A Hurry (And Don’t Know Why)”.
At 7:10 AM CDT in the North American futures markets:
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2889 CAD, $1 CAD = $0.776 USD)
Sept Corn: +3.5¢ (+0.8%) to $4.34 USD or $5.594 CAD
Aug Soybeans: +12.8¢ (+1.1%) to $11.463 USD or $14.774 CAD
Aug Soybean Meal (per short ton): +$6.50 (+1.65%) to $402.60 USD or $518.91 CAD
Aug Soybean Oil (cents per lbs): +0.37¢ (+1.2%) to 31.67¢ USD or 40.82¢ CAD
Sept Oats: +0.5¢ (+0.25%) to $2.155 USD or $2.778 CAD
Sept Wheat (Chicago): +5.5¢ (+1.15%) to $4.903 USD or $6.319 CAD
Sept Wheat (Kansas City): +4.8¢ (+1.25%) to $4.743 USD or $6.113 CAD
Sept Wheat (Minneapolis): +4¢ (+0.75%) to
Nov Canola: +5.4¢ / $2.40/MT (+0.45%) to $9.106/bu / $401.50/MT USD or $11.734/bu / $517.40/MT CAD
Yesterday’s Winnipeg ICE Close
Oct Barley: unchanged at $2.898 USD or $3.734 CAD
Oct Durum Wheat: +2.7¢ (+0.35%) to $6.272 USD or $8.083 CAD
Oct Milling Wheat: unchanged at $4.879 USD or $6.287 CAD
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.