March 22 – Grain Prices Go Green on Lower US Dollar

Good Morning!

Grain prices this morning are mostly in the green, as we’ve faced an up and down week with many fresh headlines fighting for attention.

“The unsuccessful person is burdened by learning, and prefers to walk down familiar paths. Their distaste for learning stunts their growth and limits their influence.” – John C. Maxwell (American author)

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Grain Prices Go Green on Lower US Dollar

Grain prices this morning are mostly in the green, as we’ve faced an up and down week. I’ve had my own ups and downs this week, running around the hills of San Francisco as a speaker at the World Agri-Tech Investment Summit. I’ll look to pen something over the weekend on a few of the main takeaways.

As Garrett mentioned yesterday in his afternoon recap, Grain Markets Today, grain prices were fairly quiet as some monetary policies hung over markets. Yesterday, the US Federal Reserve raised the benchmark interest by 25 basis points – or 0.25% – because the US economy is acting pretty strong.

When we see an interest rate increase, we usually expect the US Dollar to strengthen, however, this morning the US Dollar is down, and most grain prices are up. Canola prices are the exception this morning though as the Canadian Loonie has inched closer to 78 cents USD, a sharp change from where it closed last Friday below 76.5 cents.

As Garrett mentioned yesterday, the USDA attaché in Canada did lower its estimate of the 2018/19 canola crop in the Great White North to 20.5 million tonnes. [1] This is 800,000 tonnes below their previous forecast and the current estimate from Agriculture Canada. It also means that the 2017/18 record canola crop of 21.3 million tonnes won’t be eclipsed.

The downgrade comes as acres are still projected to be a record 24 million. The primary factor influencing their downgrade is the low subsoil moisture levels across the Canadian Prairies going into Plant 2018. Granted there has been some decent snowfall recently, it doesn’t all translate into completely recharging dry soils from last year’s parched year in many parts of Western Canada.

For our GrainCents subscribers, Garrett’s been digging more into the possibility of record soybean acres expectations this spring, but also recognizing that “King Corn” is no longer King. Also, Adrian published a great GrainCents piece yesterday for our durum readers on durum prices in Italy, and 2018/19 production expectations for the French and Italian durum wheat crops.

South American Grain Prices Update

Grain prices in Brazil have improved some with some currency factors. There continue to be some big production estimates for the country, with 114 – 115 million tonnes a bit more commonplace. Conditions for the second-planted safrinha corn crop are near ideal with some above-average rainfall.

That being said, for our GrainCents corn subscribers, we started talking two weeks ago about what sort of impact a slightly later planting season and heavy rainfall can have on final corn production in Brazil. Right now, most total-year production estimates for the Brazilian 2018/19 corn crop are pegged between 88 – 90 million tonnes.

Next door in Argentina, rains are falling – 0.25 to 1.25 inches – but temperatures are still sitting in the high 80s/low 90s Fahrenheit. At the World Agri-Tech Investment Summit this week, I talked with one Argentine producer in the epicenter of the dryness there at, he told me that he’s expecting his soybean yields to be about 30-40% of their usual average. He said that calling it “dry” was an understatement.

That being said, yesterday Rabobank downgraded its estimate for the Argentine soybean crop to 40 million tonnes, matching many other private estimates. Meanwhile, the USDA is currently at 47 million tonnes and likely to downgrade again in the April WASDE. For the Argentine corn crop, Rabobank felled their production forecast to 33 million tonnes, again in-line with a lot of other private analysts.

Get Your Daily Grain Prices/Markets Update

Other than Monday’s sell-off, this week’s grain prices haven’t been too active. There are a lot of outside influencers like geopolitical risk, currency change, and outside equity markets that are helping coerce grain prices to go one way or another, but it’s been quiet the past few days.

Of course, I’m speaking relative to the volatility and trading ranges of the past four weeks. That being said, despite some decline the last week or so, canola prices, soybean prices, and corn prices are still at pretty decent levels. After all, if you look at their price charts over the past year, how many times have we been at these heights?

I recently had a good conversation with a reporter from Manitoba Co-Operator about how to think through these sorts of situations for grain prices like a risk manager, instead of a gambler. [2]

If you’re not getting a Breakfast Brief, a reminder to bookmark the Breakfast Brief page on the FarmLead.com website. You can do this on your smartphone, too! Also, if you want to see the end-of-day grain prices recap, you should be bookmarking the Grain Markets Today page.

Garrett and I have been discussing the state of wheat markets recently and the state of the sell-off in the past two weeks. Arguably, this has been more speculator, and technical-driven than anything, as fundamentals for winter wheat prices aren’t this bearish. More specifically, US winter wheat quality numbers have improved a bit, but they’re nowhere near great.

On the flipside, Russia’s winter wheat crop for the 2018/19 harvest is looking big again (albeit not a record).

What’s also booming is the Chinese pork sector, which is good for feedstuffs demand, namely soybeans. It doesn’t come by surprise then that the USDA’s attaché in China raised its estimate for Chinese soybean imports to a whopping 100 million tonnes. Forget about tariffs; China needs soybeans!

Overall, grain prices are seeing a lot of fresh headlines being thrown at it. To help clear the noise, understand the major and minor factors affecting your crops and agribusiness operation in our GrainCents portal. We look intensely at what’s bullish, what’s bearish, and the help separate what’s important to watch for from what’s not for grain prices. Leveraging a 93% accuracy over the past two years, we’re also giving specific cash grain sales recommendations to benchmark your grain marketing strategy against.

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

At 7:20 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2870
 CAD, $1 CAD = $0.7770 USD)

May Corn: +0.2¢ (+0.53%) to $3.770 USD or $4.852 CAD
May Soybeans: +2.5¢ (+0.24%) to $10.323 USD or $13.285 CAD
May Soybean Meal (per short ton): +$4.10 (+1.12%) to $368.60 USD or $474.376 CAD
May Soybean Oil (cents per lbs): +0.2¢ (+0.50%) at 32.2¢ USD or 41.5¢ CAD  
May Oats: -0.8¢ (-0.32%) to $2.308 USD or $2.970 CAD
May Wheat (Chicago): +5.8¢ (+1.27%) to $4.593 USD or $5.910 CAD
May Wheat (Kansas City): +7.0¢ (+1.50%) to $4.723 USD or $6.078 CAD
May Wheat (Minneapolis): +3.8¢ (+0.64%) to $5.930 USD or $7.632 CAD
May Canola: -$1.50 (-0.29%) to $11.789/bu / $519.80/MT CAD or $9.160/bu / $403.895/MT USD

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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