Grain markets this morning are mixed with corn prices giving up some of yesterday’s gains while soymeal prices are leading oilseeds higher.
“Reality is the leading cause of stress among those in touch with it.” – Lily Tomlin (American actress)
Corn Prices Leading Choppy Grain Trade
Grain markets this morning are mixed again with corn prices giving up some of yesterday’s gains while soymeal prices are leading the oilseed complex higher.
As Garrett mentioned in his regular afternoon markets recap, Grain Markets Today, grain prices were pretty choppy yesterday. While it didn’t get a lot of press time, more than half of the United States is facing some level of drought, with the worst of it in … can you guess … the US Southern Plains.
The big topic du jour though in the US was the soybean crush report, which helped soybean prices, and grain export sales, which helped corn prices (more on this later).
The NOPA crush report showed that total volumes of US soybeans that were processed domestically in February 2018 were 153.72 million bushels (or a little more than 4.18 million tonnes if you convert bushels to metric tonnes). This easily topped the trade’s pre-report guesstimates and is a new record for the month.
For the Canadian grain market, the Loonie dropped for the third straight day and is now sitting below 76.5 cents USD. The reason for the decline is that Bank of Canada governor Stephen Poloz suggested earlier in the week that interest rate increases could become more gradual going forward as the economy expands. 
The Canadian Dollar is already the worst performing currency of the G8 countries, having lost more than 4% thus far in 2018. Comparably, the Japanese Yen is up nearly 7% year-to-date, the British Pound has gained 3.4%, and the Eurodollar is up nearly 3%. Only the Australian Dollar, down 0.55%, and the US Dollar, down 2.5%, are negatively performing so far in 2018.
Corn Prices React to Strong Exports
Net sales of US corn to international buyers last week came in at a little more than 2.5 million tonnes! That’s the largest single-week corn export sales volume in literally 24 years. It’s also three times more than what was contracted at this time a year ago and 35% higher than last week.
Finally, it was double what the market was expecting, so of course, corn prices had a positive day. Keep in mind though that total shipments though are still tracking 27% below where they were a year ago.
Why does this matter?
Last week, in the March WASDE report, the USDA just raised their target of US corn exports in 2017/18 by 4.5 million tonnes (or 175 million bushels) to 56.5 million (or 2.225 billion bushels)! This number is technically only 3% lower from the 2016/17 US corn export total. Again, US corn exports are tracking 27% behind 2016/17 shipments!
The question we’re asking ourselves here at FarmLead is if the market has priced in the total-year forecast for corn prices? Or is being cautious and only accounting for the real number that we see today.
For other US exports, the USDA said that last week’s export sales totaled 1.27 million tonnes (or 46.6 million bushels if you convert metric tonnes to bushels). Actual weekly shipments of US soybeans were just under 901,000 tonnes (33.1 million bushels), which means that they’re tracking about 12% behind last year. For the record, the USDA is forecasting 56.2 million tonnes (or 2.065 billion bushels) of US soybean exports this year. That’s 5% lower-year-over-year.
For US wheat exports, the numbers were also interpreted as bearish with export sales just 6 million bushels (or 163,300 tonnes) Comparably shipments of US wheat were 12.3 million bushels (or 334,750 metric tonnes), which puts total US wheat exports down 8% year-over-year.
How do Canadian Grain Exports Stack Up?
Speaking of grain exports, we’ve been looking at Canadian grain shipments this week for our GrainCents readers.
Yesterday, we looked at the impact of slower grain movement on canola prices (and specifically basis), spring wheat basis levels, oats prices, and durum prices. We also peeked at Canadian barley prices and exports and where we might go from here.
The critical thing to note is that export volumes for total Canadian grain need to pick up considerably to hit the targets laid out by Agriculture Canada. Right now, the market is pricing current grain export volumes, not said targets. We point out though for our GrainCents readers specifically where shipments need to be at through the rest of the 2017/18 crop year to meet full-crop-year expectations.
One positive is that CN railroad recently responded to the industry, suggesting that they’ll do a better job of managing railcar flow.  They’re also committing to $250M in spring and summer railroad track building, including five stretches of double lines along the main line in eastern Alberta / western Saskatchewan.
However, the most recent Ag Transport Coalition showed us though that CP and CN railroads supplied a combined 45% of requested grain railcars in week 31 (2 weeks ago now).  While up 32% from the week previous, it’s the second worst weekly fulfillment performance to date.
No one likes choppy performance – especially when it negatively impacts grain prices.
Have a great weekend!