With rains falling in drier places, grain markets saw a significant sell-off yesterday but are trying to rebound this morning and are mostly in the green.
“An optimist is a person who sees a green light everywhere, while a pessimist sees only the red stoplight… the truly wise person is colorblind.” – Albert Schweitzer (French-German theologian)
Grain Markets Seeing Red
Grain markets this morning are trying to rebound after a significant sell-off yesterday to start the week. Rains arrived in Argentina, and the US Southern Plains, so soybean and winter wheat speculators headed for the exits, prompting double-digit losses in those crops. Winter wheat prices on the futures boards were limit down. 
Corn prices also dropped as bears are starting to argue for decent planting conditions. We specifically looked at this factor on Friday for our GrainCents readers, noting that King Corn is dead, and long live King Soybeans.
The sell-off in grain markets was also influenced by a sell-off in the broader equity markets, led by the technology sector, namely Facebook.  This is somewhat ironic as I’m in San Francisco this week, speaking at the World Agri-Tech Investment Summit. However, yesterday during my travels (hence no Breakfast Brief) and meetings, all I could look at was the grain markets in the red.
But again, for the most part, grain markets are back in the green this morning as the dust settles. With Plant 2018 just around the corner (and already started for some) the focus is becoming less “what is going wrong” to “what is looking right.” With the latter looking more positive suddenly in the eyes of money managers, they start to see red and move out of the positions quickly.
Strong European Wheat Prospects?
What’s certain the last few trading days is that grain markets are taking it on the chin from outside influencers (outside North America that is). Once such influencer is the state of crops in Europe and the Black Sea.
Over the past few days in GrainCents, we’ve been looking deeper into these regions and the state of the winter wheat crop specifically. What we know is that Russian winter wheat is dominating the low-protein wheat trade game, taking a fair amount of business again from European traders. For our GrainCents winter wheat readers, we also looked at the potential for the 2018/19 Russian winter wheat crop and how it may impact wheat trade in 2018/19.
There is a strong sense of bullishness in the market because of rains last fall creating some challenging conditions in northern European countries to get the crop in. The best example of this is in Germany, where the farm co-op association is forecasting a 24.2 million-tonne wheat crop in 2018/19. This would be down 1.1% year-over-year.
The thinking is though that spring-planted wheat could replace those lost winter wheat acres. That being said, with so much milling wheat left over, in Germany specifically, feed wheat prices in parts of Germany are above those of milling wheat. 
In France, FranceAgriMer dropped its good-to-excellent (G/E) rating for the soft wheat crop to 80%, 12 points behind where it was a year ago. Durum rated G/E was raised by 2 points to 77%, but this is still a four-low and 4 points behind the 81% at this time a year ago.
As it relates to durum, last week for our GrainCents durum readers, we looked at the prospects of the American durum crop in 2018/19, starting with acres. Yesterday, we dug into the Canadian side of the equation, looking at the potential impact to the balance sheet (and durum prices) of a larger OR smaller Canadian durum crop in 2018/19.
Getting a Pulses on Pulses
Over the weekend, I penned an op-ed looking at the one thing that grain markets aren’t as relates to India’s import taxes: politics. In fact, the game that India’s playing as it relates to pulses is not economics at all, but the concern from the current government there that they’ll stay in business, er, I mean office.
As such, we looked into current lentils prices in India and how they measure up against the different scenarios for import tariffs being removed or raised (both are very possible). We also worked through a similar scenario for chickpeas import taxes climbing or falling, albeit we know that this is most impactful in Australia and the American desi chickpeas (or garbanzos) crop.
In Canada, what’s notable for grain markets as it relates to pulses is the protein supercluster that was awarded $150 million over the next five years. While it’s certainly positive for the sector and peas demand; it will create lots of jobs (which was the government cares about) and more value-add for the Canadian pulse industry. However, it’s more than a few years away from reality.
With that said, we took a deeper look into what the protein supercluster really means for peas demand within Canada. At this point of most farmers seeing red when they look at local bids for peas, it would be a welcome change.