March 1 – Lowering Expectations

FarmLead Breakfast Brief
Wednesday, March 1, 2017

Good Morning!

Due to travel restrictions, no futures pricing data is available this morning.

Lowering Expectations

Heading into the first day of trading for the month of March, grain markets are mostly in the green as the new month provides opportunity for new money flow into the sector. Also supporting the general outside markets was President Donald Trump’s speech last night to Congress, in which he called for a “new chapter of American greatness”. Yesterday we saw grain marketing see-sawing on the news that the Trump Administration was going to change the Point of Obligation to blenders from refiners (which would generally suggest more demand). However, the ethanol change suggested was later denied by the White House, although the combo of new money and this bullish news helped push the market higher. Perhaps the RFA was the first to test the new U.S. Administration’s meddle by what’s being said behind closed doors but instead is lowering their expectations when action doesn’t take place..

GASC, the Egyptian state grain buying agency, was back in the market, buying 535,000 MT of wheat from France, indicating just how much Black Sea, namely Russian, wheat prices have risen relative to other competitors. Staying in Europe, spring seeding conditions continue to be relatively ideal for German and French malt barley growers, getting them into the field well ahead of the normal pace. This will put some pressure on the market but we’ve seen some very strong sales of old crop malt barley on the FarmLead Marketplace the last 2 weeks for delivered prices above $6 CAD / bushel. In South America, rains in the north continue to make it difficult to deliver soybeans to port locations on the Amazon River, with reports of 4,000 – 5,000 trucks being stuck in a 50-mile traffic jam (can you imagine!?!). Regardless, rains haven’t slowed soybean harvest in major producing-region Mato Grosso, which AgResource expects to be closer to 80% competed by the weekend. Oil World recently joined the buzz and raised their soybean production forecast to a record 105M tonnes and expect exports to hit 52.3M tonnes, both records.

It is still Carnival holidays in Brazil, with very few active selling. Producers are expected to come back tomorrow afternoon o\r early Thursday. With the CBOT not rallying and also the currency weaker, it’s hard to imagine a big flux from sells. South American weather is generally favorable with drier/warmer weather featured across Argentina, while near to above normal rain drops across North and Central Brazil. The Brazilian rains could cause some slowdown of the harvest, but so far, any loading delays of boats either off the northern arc or the eastern shores is modest. Argentine fob soybean offers are the cheapest in the world with Brazilian fob offers still $2-3/MT above the US Gulf. The harvest in Mato Grosso reached 66% as of last Friday and should probably be close to 80% this Friday.

Turning into March, we start to look more closely at the spring North American weather forecasts and while there continues to be bullish headlines like “El Nino May Be Fast-Tracking Arrive By Summer”. However, those don’t mean much as the switch across the line that declares a La Nina versus an El Nino literally just happened. The NOAA is expecting the most southern and eastern halves of America to have above-average temperatures but also expect the majority of U.S. farmers to enjoy decent planting conditions. While everyone can agree that weather forecasters are hardly accurate, from a grain marketing standpoint, the best place to start is to expect trendline yields, which would be less than last year, but still 170.7 bu/ac corn would still be a large crop! As AgYield suggests, if you’re hoping for $4.50 USD / bushel on the Chicago futures board, it might be time to lower your expectations.

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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