Mar 23 – The Attaché Speaks

Good Morning FarmLead User!

 At 6:30 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3319 CAD, $1 CAD = $0.7508 USD)

May Corn: -1¢ (-0.3%) to $3.578 USD or $4.765 CAD
May Soybeans: -4.5¢ (-0.45%) to $9.953 USD or $13.256 CAD
May Soybean Meal (per short ton): -$0.80 (-0.25%) to $322.70 USD or $429.81 CAD
May Soybean Oil (cents per lbs): -0.18¢ (-0.55%) to 33.34¢ USD or 44.41¢ CAD  
May Oats: -0.3¢ (-0.1%) to $2.518 USD or $3.353 CAD
May Wheat (Chicago): +0.3¢ (+0.05%) to $4.225 USD or $5.627 CAD
May Wheat (Kansas City): unchanged at $4.325 USD or $5.761 CAD
May Wheat (Minneapolis): +2.3¢ (+0.4) to $5.40 USD or $7.192 CAD
May Canola: -2.5¢/bu / -$1.10/MT (-0.2%) to $8.522/bu / $375.78/MT USD or $11.351/bu / $500.50/MT CAD

Yesterday’s Winnipeg ICE Close
May Barley: unchanged at $2.24 USD or $2.983 CAD
May Milling Wheat: -2.7¢ (-0.45%) to $4.72 USD or $6.287 CAD

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The Attaché Speaks

Grains this morning are mostly lower with front-month soybeans trading below $10 USD / bushel in Chicago and canola clinging onto that $500 CAD / MT level with dear life. Demand for soybeans remains clear as the U.S.D.A. attaché in Beijing says that 89M tonnes of the oilseed will be imported by China in 2017/18, up 3M tonnes from this year’s 86M tonnes of demand. The problem isn’t the demand though, but rather the supply. MetLife Ag Finance thinks that U.S. farmers will only plant 87M acres of soybeans this spring, below the U.S.D.A.’s current estimate of 88M acres and Allendale’s forecast of 88.8M. MetLife may be on to something as with the N.O.A.A.’s recent spring forecasting calling for dry conditions in 2Q2017, corn plants may continue to roll instead of switching over into beans. As we get closer and closer to the March 31st acreage report, we’re seeing a few more reports from U.S.D.A. offices around the world, which has provided a bit of fuel to the bears and bulls, since there’s not of other headlines to trade off of.

The U.S.D.A.’s attaché in Indonesia is expecting palm oil production in the country to hit a record 36.5M tonnes in 2017/18 thanks to a strong recovery from dry El Nino conditions. Accordingly, palm oil exports out of the Southeast Asian country is expected to be barely unchanged from last year at 25.5M tonnes, still close to the record of nearly 26M tonnes shipped out 2014/15 when output was 33M tonnes. The reason for the stagnant export growth is competition with other vegetable oils, namely soyoil where it is only $15 USD/MT less than soyoil at the Rotterdam port. Accordingly, palm oil inventories in Indonesia are expected to end the 2017/18 marketing year 74% higher than 2016/17 at nearly 3M tonnes.

After back-to-back dry years in South Africa, local grain industry body AgBiz says that local grain prices are likely to hit new multi-year lows with production rebounding significantly. The U.S.D.A. is expecting the 2016/17 harvest to reap 14.6M tonnes of corn, a 78% improvement over last year’s crop. However, AgBiz is also cognizant of the likelihood of an El Nino starting to affect things in the latter half of 2017, and the potential bullish impacts that could have on prices going into the 2018/19 crop year (yes 3 years out). Right now, the Japanese are suggesting there’s a 40% chance of an El Nino happening while the Australian Bureau of Meteorology thinks there’s about 50% chance.

The U.S.D.A.’s Cairo attaché says that Egyptian wheat imports in 2017/18 will climb higher by 500,000 to 11.5M tonnes, owning the majority of the 20M tonnes of domestic demand that’s expected next year (mainly thanks to a bigger population). This comes after a shipping year where the G.A.S.C. (the Egyptian state grain-buying agency) was plagued by ergot and currency issues. Domestic production in the Middle Eastern country is expected to be flat year-over-year at 8.1M tonnes, but with the higher consumption, 2017/18 ending stocks should fall by more than a quarter to 25.6M tonnes. Elsewhere in the wheat complex, rain forecasted over the next week continues to be seen as generally favourable to winter wheat crops coming out of dormancy. Also, SovEcon is thinking that the Russian wheat crop could be a lot smaller than last year’s bumper harvest, forecasting 62.5M-tonnes of production versus 2016/17’s 73.3M-tonne haul. To be honest though, It’s a bit early to call what the winter wheat crop in the Northern Hemispher emerges like so for now, we’ll just let the attaches speak their mind.

To growth,

P.S. If you missed our big announcement earlier this week, read up on it here!

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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