January 21 – Keeping Healthy Plans

In today’s Breakfast Brief, we look at El Nino, European winter wheat conditions, and weighing the options and opportunities in the future. 

“A healthy attitude is contagious but don’t wait to catch it from others. Be a carrier.” – Tom Stoppard (British playwright) 

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Good Morning!
Grains this morning are mostly quiet and mixed as after yesterday’s mostly lower day broader markets continue to unwind off of global macro headwinds. The Australian Bureau of Meteorology says that El Nino is not over yet as tropical cyclone activity in the Pacific is slowing the weather phenomena’s decline in strength. Colder temps in China has generated some buzz for the wheat market (hence some of the green you see above in this morning’s snapshot) but I would say that it’s something to keep abreast of but not necessarily bet your 2016 wheat marketing plan on.

Similarly, the recent cold spell in North America is creating questions over the winter hardiness of the US winter wheat crop. Granted, there’s a lot of supply out there and until the first fields come out of dormancy and we get a better idea of their conditions (much like in China, or in the Black Sea, or anywhere else), it’s healthy to have a patient plan.

European Winter Wheat Conditions

European winter wheat crops are doing alright as the recent cold spell they’ve experienced across the pond has stunted growth after an unusually warm start to winter created some concerns over the dormancy status of the crops. While it got extremely cold in Poland and some winterkill will result because of a lack of snow cover, there may be more pest / diseases issues in Britain thanks to early winter rains. In France, things continue to look good so it’s unlikely that we’ll see too much deviation from the condition ratings of the soft wheat crop when reporting resumes in February (it went in as 98% good-to-excellent!). Heading east, Russia’s weather monitoring agency says that 89% of winter crops in the nation are in good-to-satisfactory condition, which equates to about 40 million acres of winter seed crops that are doing well (comparably, 4.5 million acres, or 11% of winter acres, are n thinned or weak condition).

Weighing Options

With pulse crop prices seeing decent demand, not only are Canadian producers asking “just how much should I plant”, a similar debate is ongoing in a few other places like Europe and especially Australia. In some regions, there are doubts that too many acres will go into cereals if prices remain elevated (hard to ignore right!). On that note, ABARES is forecasting Aussie sorghum acres to continue to increase in 2015/16 to 1.73 million acres (+8% year-over-year) thanks to improved rainfall in December. However, the move to more sorghum acres may not be the smartest bet as China’s demand for the coarse grain has started to wane. As such and as previously mentioned, depending on the region, more acres might sway away from the traditional row crops and into those where the demand is currently there.

With this in mind, it’s important to take stock of the opportunities that have been presented to us this winter thus far. If you are growing pulse crops this year, there have been (and still are) some great opportunities to contract new crop acres with Act of God clauses. We’ve seen new crop durum levels move above $9/bushel while we continue to preach that it’s worthwhile to look at contracting new crop wheat, corn, and/or even soybeans on a basis basis (that is not a typo – pun intended!) and then be able to price the futures out sometime between now and harvest. You, nor I, nor any other analyst or farmer out there can tell with 100% certainty that come harvest time in 8-9 months, exactly what the price is going to be. As such, being able to lock in some price risk now on 10-40% of your potential production (depending on today’s value, relative to 5-year averages) is healthy. However, are you ready today to take advantage of bullish headlines and, as I like to say, “Sell on the rumour, and profit on the fact”? As such, check out some the bids currently posted on FarmLead and/or, post your offer to make a sale on something in order to ensure it’s exposed to the 100s of our verified grain buyers on FarmLead.

Today’s the last day of Manitoba Ag Days in Brandon, MB (and then FarmTech next week in Edmonton!! So far this month, over 325 new farmers have signed up on FarmLead to expand their grain marketing plan. Stop by our booth (see map here) to see what all the buzz is about.

To growth,

Brennan Turner
President/CEO | FarmLead
1-855-332-7653 (Toll-Free)
1-306-665-8740 (Office)
www.FarmLead.com
@FarmLead (on Twitter)

At 6:48 AM CDT in the North American futures markets:

(all prices in dollars per bushel unless otherwise indicated)

$1 USD = $1.446 CAD, $1 CAD = $0.6915 USD)

Mar Corn: +1.5¢ (+0.4%) to $3.703 USD or $5.354 CAD
Mar Soybeans: -0.3¢ (-0.05%) to $8.738 USD or $12.634 CAD
Mar Soybean Meal (per short ton):
 -$0.10 (-0.05%) to $269.70 USD or $389.99 CAD 

Mar Soybean Oil (cents per lbs): -0.16¢ (-0.55%) to 29.65¢ USD or 42.87¢ CAD 
Mar
 Oats: -3¢ (-1.45%) to $2.015 USD or $2.914 CAD

Mar Wheat (Chicago): +0.8¢ (+0.15%) to $4.723 USD or $6.829 CAD
Mar Wheat (Kansas City): +2.5¢ (+0.55%) to $4.698 USD or $6.793 CAD
Mar Wheat (Minneapolis): +0.3¢ (+0.05%) to $4.95 USD or $7.158 CAD
Mar Canola: -2.7¢/bu / -$1.20/MT (-0.25%) to $7.584/bu / $334.41/MT USD or $10.968/bu / $483.60/MT CAD

Yesterday’s Winnipeg ICE Close

Mar Barley: unchanged at $2.751 USD or $4.028 CAD
Mar Durum Wheat: unchanged at $6.208 USD or $9.09 CAD
Mar Milling Wheat: -2.7¢ (-0.4%) to $4.592 USD or $6.641 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.

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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