June 6 – Looking For Highs

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FarmLead Breakfast Brief
Tuesday, June 6, 2017

“I’ve experienced the highest of highs and lowest of lows. I think to really appreciate anything you have to be at both ends of the spectrum.” – John Elway (NFL Hall of Famer)

Good Morning!

At 6:50 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3466 CAD, $1 CAD = $0.7426 USD)

July Corn: +0.5¢ (+0.15%) to $3.735 USD or $5.03 CAD
July Soybeans: +2.8¢ (+0.3%) to $9.248 USD or $12.453 CAD
July Soybean Meal (per short ton): +$1.10 (+0.35%) to $301.70 USD or $406.28 CAD
July Soybean Oil (cents per lbs): +0.13¢ (+0.4%) to 31.44¢ USD or 42.34¢ CAD  
July Oats: +4.3¢ (+1.75%) to $2.468 USD or $3.323 CAD
July Wheat (Chicago): +4.5¢ (+1.05%) to $4.34 USD or $5.844 CAD
July Wheat (Kansas City): +7¢ (+1.65%) to $4.37 USD or $5.885 CAD
July Wheat (Minneapolis): +7.8¢ (+1.3%) to $5.968 USD or $8.036 CAD
July Canola: +2¢/bu / +$0.90/MT (+0.2%) to $8.599/bu / $378.17/MT USD or $11.58/bu / $510.06/MT CAD

Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.224 USD or $3.005 CAD
July Milling Wheat: +10.9¢ (+1.6%) to $5.174 USD or $6.967 CAD

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Looking For Highs

Grains this morning are mostly in the green as the complex continues to weigh in on a bit more production uncertainty, especially with the weather in the Western Cornbelt, Northern Plains, & part of Western Canada turning hot this week. Some moisture events are forecasted to happen over the next 10 days but nothing substantial until June 15th. As such, spring wheat is the leader of the bullish camp with traders and end-users getting a bit more antsy about the current old crop and potential new crop supply of protein, giving that the U.S. winter wheat harvest isn’t expected to perform too well. The U.S.D.A.’s crop progress report yesterday showed the lowest G/E rating since 2002 and the largest 1-week drop since 2008. Accordingly, spring wheat values on the Minneapolis Grain Exchange hit 2-year highs yesterday (although no contracts are sitting about $6 USD / bu this morning). As such, we saw plentiful trading activity on FarmLead or those looking to empty out bins and lock up some new crop. Is your grain posted & available to negotiate on?

Yesterday’s crop progress report out from the U.S.D.A. showed us that U.S. corn planting is pretty much complete at 96% seeded (97% is both where things were at a year ago & the 5-year average) with 86% of the crop emerged (88% last year and 87% the 5-year average). Corn good-to-excellent ratings were improved though by 3 points week-over-week to 68%, but that’s still a few points away from last year’s 75% G/E to start the month of June. For soybeans, 83% of the forecasted 2017 U.S. crop is in the ground, up from 82% a year ago and the 79% 5-year average, with 58% now emerged (62% a year ago, 59% is the 5-year average). With 87% of the U.S. winter wheat crop now headed (90% a year ago, 85% 5-year average), harvest is underway in the Southern Plains with 10% of the crop now combined. However, the G/E rating of the U.S. winter wheat crop dropped 1 point week-over-week to 49% (was 62% a year ago). Conversely, 62% of the U.S. oats crop is rated G/E (up a point from last year but still below 71% a year ago) while 69% of the U.S. barley crop is considered G/E (down 1 point week-over-week and down from 78% a year ago). In that same vein, 55% of the U.S. spring wheat crop is considered in G/E shape (a 7-point from week-over-week and well below the 79%% a year ago) with 90% emerged (95% a year ago, 85% 5-year average). In that same vein,

Russian wheat prices are up for a 3rd straight week as the Ag Ministry there continues to downgrade the crop, this time to 100M – 105M tonnes from the previous forecast of 110M tonnes. Spot movement for 12.5% protein is sitting around $186 USD / MT (or $6.85 CAD / bushel) FOB Black Sea ports, while movement for new crop in July/August is trading around $176 USD / MT (or $6.45 CAD / bushel). Part of the reason for the downgrade is the pace of spring-planted cereals as Russian farmers have seeded about 70.9M acres (or about 93% of the forecast), but this is roughly 2.72M acres behind what they had planted by this time a year ago. More crop-specific, 31.6M acres of corn has been seeded, about 1.73M acres behind last year’s number at the start of June. SovEcon says that the downgrade is more to do with some recent colder and wetter weather, although some warmer temperatures are expected this week.

AgResource says that Brazil’s export commitments are currently tracking 4% ahead of last year’s pace but the U.S.D.A. is actually forecasting a 22% increase. This intuitively means that Brazilian exports will have to pick up the slack (rather, Chinese buying will), otherwise the country’s carryout could be at least 2M tonnes and possibly as high as 4M tonnes higher than the 5.7M the U.S.D.A. is currently estimating (the record is 6.34M set in 2007). There is some rising geopolitical risk in the Middle East between Qatar and neighbours, which could impact oil prices, and therefore, soyoil prices, and therefore, soybeans. With North American soybean seeding on the homestretch, there continues to be bearish winds affecting the oilseed complex. Needless to say, like we mentioned yesterday with the highs of the canola market, without significantly dry weather for the next 4-6 weeks (AKA no rain), the soybean complex has surely seen the highs of the year.

Finally, we take a moment this year to reflect on the 73 years since D-Day happened on this day in 1944. The Normandy campaign by Allied forces against Nazi Germany was the largest amphibious invasion in history, as more than 160,000 troops landed in France to defeat Hitler. Without a doubt, the sacrifice made on this day by the more than 10,000 troops laid the foundation for the end of World War 2. A thank you doesn’t seem to justify it so please take a moment at some point to think about this effort.

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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