Mar 24 – More of the Usual?

FarmLead Breakfast Brief
Friday, March 24th, 2017

“Mistakes are the usual bridge between inexperience and wisdom.”
– Phyllis Grissim-Theroux (U.S. author)

Good Morning!

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More of the Usual?

Grain markets are mostly lower this morning as the market continues to slide on lack of direction and some outside market influences like record oil supplies in the U.S.. Front-month contracts for soybeans posted new 5-month lows while wheat doesn’t have much going on for it except rain in the forecast across the U.S. Southern Plains (amidst some creeping drought conditions), offset by the fact that U.S. wheat exports are now trailing behind what the U.S.D.A. has predicted for the 2016/17 crop year. On the flipside, U.S. corn shipments are 65% higher than where they were last year while U.S. soybean exports are 14% above a year ago. Despite this, grain prices continue to slip on the Chicago futures board. Egypt will continue to accept 13.5% moisture wheat through November, slightly above their usual 13%, in order to keep European offers (namely French-origin) in their usual tenders. A piece of good info is that an Indian newspaper is suggesting that an extension of the exemption for fumigation of Canadian pulses bound for India is imminent, meaning we could be back to business as usual soon.

The closer we get to the U.S.D.A.’s acreage report on March 31st, the more estimates we’re getting. Yesterday INTL FCStone put out their number of acres planted with soybeans in the U.S. at 87.3M  (U.S.D.A. at 88M) while calling for 91.6M acres of corn (U.S.D.A. at 90M). Comparably, Rabobank is forecasting 91.5M acres of corn getting planted in the U.S. and 86.4M acres of soybeans, which is the lowest we’ve seen thus far and intuitively why Rabobank is forecasting soybeans futures prices in 3Q2017 to average $10.50 USD / bushel on the Chicago futures board.

One factoring challenging the bullishness of Rabobank is the growing size of both the Brazilian & Argentinian soybean crops, the latter of which was just raised by the Buenos Aires Grains Exchange to 56.6M tonnes. Brazil’s soybeans harvest in the heart of grain-producing regions in the Center West is thought to be above 90% now, finally putting pressure on domestic prices, which have fallen a bit recently, on harvest pressures and the meat scandal in Brazil having a negative impact on local feedstuffs demand.

AgResource is reporting that ship wait times in Brazil are half of what they were a year ago, with vessels getting loaded within 2 weeks of pulling into ports. On that note, one is able to have a view on how many boats are expected to get loaded and where they’re going, with the data suggesting that Chinese soybean imports in April could come in at 8M tonnes, which would be 1M tonnes higher than April 2016. Staying in Chinese imports, the 89M tonnes pegged in 2017/18 would be the 14thconsecutive year of a new record number. Rapeseed imports in 2017/18 by China are pegged by the U.S.D.A.’s attaché in Beijing at 4.1M tonnes (record was a little over 5M tonnes in 2013/14), despite domestic production in the People’s Republic expected to fall to a 7-year low of just 13.1M tonnes as the usual minimum government prices have been abolished.

Have a great weekend!

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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