Mar 2 – Feeling A Bit Jealous?

FarmLead Breakfast Brief
Thursday, March 2nd, 2017

“I don’t ever remember being particularly jealous of anybody, because I figured if I can’t do it myself, I don’t deserve to get it.”
– 
Clyde Tombaugh (US astronomer)

Good Morning!

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 = $1.3328 CAD, $1 CAD = $0.7503 USD)

May Corn: -1.3¢ (-0.35%) to $3.808 USD or $5.075 CAD
May Soybeans: -3.3¢ (-0.3%) to $10.485 USD or $13.974 CAD
May Soybean Meal (per short ton): -$0.80 (-0.25%) to $338.50 USD or $451.15 CAD
May Soybean Oil (cents per lbs): -0.28¢ (-0.8%) to 34.46¢ USD or 45.93¢ CAD 
May Oats: unchanged at $2.528 USD or $3.316 CAD
May Wheat (Chicago): -1¢ (-0.2%) to $4.55 USD or $6.078 CAD
May Wheat (Kansas City): -1.3¢ (-0.25%) to $4.76 USD or $6.344 CAD
May Wheat (Minneapolis): -1.3¢ (-0.2%) to $5.603 USD or $7.467 CAD
May Canola: -4.1¢/bu / -$1.80/MT (-0.35%) to $9.037/bu / $398.48/MT USD or $12.045/bu / $531.10/MT CAD

Yesterday’s Winnipeg ICE Close

May Barley: unchanged at $2.273 USD or $2.983 CAD
May Milling Wheat: +19.1¢ (+3%) to $4.921 USD or $6.559 CAD

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Feeling A Bit Jealous?

Grains this morning are lower after some new money buying yesterday as traders take some profits on a stronger US Dollar and the imminent likelihood of a U.S. interest rate hike by the Federal Reserve, which Goldman Sachs thinks could push the Greenback 10% higher. Paris wheat futures prices hit a 7-month high yesterday after Egypt bought 535,000 MT from France. The purchase takes the G.A.S.C. to 5.14M tonnes of wheat bought thus far in the 2016/17 season, which would be 22% higher than the 4.2M tonnes locked up by this time last year. The demand is welcome as the market needs to work through a lot of grain and it helps that next year we’ll see a smaller global output, with the UN’s FAO calling for a 744.5M-tonne crop, and the first drop in production in 5 years. However, everyone else is more bearish, calling for world production around 730M-735M tonnes with acres down in North America, especially in Canada where it’s likely we see more non-wheat cereals like oats getting planted, because of disease issues becoming more commonplace lately (agronomic crop jealousy, if you will).

In India, there’s speculation that the government’s import tax on wheat could hike back up to 25% in the next couple of weeks as they continue slow down shipments coming in ahead of the rabi winter crop harvest. The Indian government is currently forecasting at 96.6M-tonne wheat harvest this year, but the U.S.D.A. is only expecting 87M tonnes to come off this year. On the pulses crop front, we’ve seen more than a few grain buyers go no bid until there’s more clarity on the Indian fumigation and import needs. Bids will likely return, but as the Saskatchewan Pulse Growers pointed out this week, 90% of Canadian yellow peas go to 3 countries and 86% of small red lentils go to 5 different nations. If there’s a hiccup in the trade with any of the partners, things can get ugly fairly quick (such as now).

While we now know that there aren’t going to be any major changes to the ethanol mandate from a quantity standpoint, ethanol production today remains relatively strong (476.3M bushels used in January is up 7% year-over-year) but inventories continue to build. Switching into the oilseed side of things, Allendale Brokers points out that U.S. soybean crush in January was up 6.3% year-over-year and total year-to-date crush is up 3.3% versus the USDA’s forecast of 2.3% for the total year. The biofuel prospects have been supportive of canola though (along with a lower Canadian Loonie), which accordingly has pushed prices back up to very actionable levels (post your next block on FarmLead now!). In Brazil, it’s estimated that grain traders are losing $400,000 USD / day waiting for the trucks travelling on the famously-terribly BR-163 dirt highway to northern ports. The government expects the highway to be completely paved by 2018 but in the meantime, getting to the Amazon River loading facilities remain very difficult. Keep in mind that there’s about 3 ships worth of trucks stuck on the road (or about 150,000 MT), and when put into the context of exports this year and that February exports were way ahead of last year’s pace, it’s not a huge amount.

Speaking of logistics gongshows, Japan is having to dip into its emergency wheat and corn stockpiles to offset the delay in U.S. shipments making landfall across the Pacific. Thanks to heavy rain and snow in the American northwest, movement and ship-loading delays have become prominent and it has international buyers potentially looking elsewhere. That elsewhere may be the Black Sea, although the strength of the Russian Rouble lately is slowing down its exports pace, whereas neighbouring Ukraine is seeing things pick up, including heavy corn shipments as of late (over 1M tonnes in the last 2 weeks alone!). There are a few analysts who expect Russian logistics issues to improve once spring weather arrives, albeit the damage is done as total export volume estimates continue to shrink with the IGC at 36.7M tonnes, SovEcon at 35M-36M, and the Russian Ag Ministry forecasting 37M tonnes, which would be down from their aggressive 40M-tonne call earlier in the year. Ironically, the IGC raised its forecast for total Ukrainian grain exports to 40.1M tonnes (many reasons for the Kremlin / Putin to get jealous?).

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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