“Let the future tell the truth, and evaluate each one according to his work and accomplishments. The present is theirs; thefuture, for which I have really worked, is mine.”
– Nikola Tesla (Serbian inventor)
At 7:30 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3349 CAD, $1 CAD = $0.7491 USD)
May Corn: +1.5¢ (+0.4%) to $3.69 USD or $4.926 CAD
May Soybeans: +4.5¢ (+0.45%) to $10.045 USD or $13.409 CAD
May Soybean Meal (per short ton): +$0.90 (+0.25%) to $329.80 USD or $440.26 CAD
May Soybean Oil (cents per lbs): +0.19¢ (+0.6%) to 32.49¢ USD or 43.37¢ CAD
May Oats: -1.3¢ (-0.55%) to $2.488 USD or $3.321 CAD
May Wheat (Chicago): +2.5¢ (+0.55%) to $4.388 USD or $5.857 CAD
May Wheat (Kansas City): +0.5¢ (+0.1%) to $4.54 USD or $6.061 CAD
May Wheat (Minneapolis): +2.5¢ (+0.45) to $5.515 USD or $7.362 CAD
May Canola: +6.1¢/bu / +$2.70/MT (+0.55%) to $8.603/bu / $379.34/MT USD or $11.485/bu / $506.40/MT CAD
Friday’s Winnipeg ICE Close
May Barley: unchanged at $2.234 USD or $2.983 CAD
May Milling Wheat: -5.4¢ (-0.85%) to $4.791 USD or $6.396 CAD
Changing The Future
Grain markets this morning are mostly in the green on a lower U.S. Dollar and a bit more focus on some spring weather. Data out Friday showed that managed money switched their collective corn opinion to a net-short position, cut back on how bullish they’re feeling about soybeans, and increased their net-short wheat position. However, wheat prices are getting some support this morning from the dry conditions as most of the rains forecasted to fall later this week are unlikely to provide the required moisture to alleviate most of the risk. There’s another workers strike set to happen in Argentina at the Rosario port next week for better wages but the market is taking this on with due course as we see it happen every year and the growing conditions in South America continue to remain favourable. In fact, the harvest is practically too good in Mato Grosso, Brazil as producers are calling for cheaper credit in order to ease the challenge of storing all the grain they’re harvesting. That being said, with the South American crop seemingly out of the way, Jerry Gulke reminds us that just a 2 or 3 bushel / acre difference across tens of millions of acres can change grain prices in the near future.
Thanks to the end of state supported-prices and a 20% drop in futures prices, it’s expected that China’s corn harvest will drop again for the second consecutive year. With acres down by about 1.6M this year, there’s still a lot of corn that will be produced, but it’s not so much the current production that’s an issue, but the hundreds of millions of tonnes of stocks that are the burden (the real number is hotly debated, ranging from 200 – 250 million tonnes with the U.S.D.A. latest estimate at 231M). With a significant amount of it unable to be used for food, more policy-makers are arguing for the sub-par quality and multi-year-old corn to put into ethanol. On the flipside, there’s more financial incentive from the government of the People’s Republic to plant soybeans, alfalfa, and silage corn, products that would all go into livestock feed markets in an attempt to slow the need for China to be reliant on imports (they currently are expected to be responsible for 63% of global soybean imports in 2016/17!).
With less focus on South American production, the market’s focus is turning more to North American weather and possible acres. One question that’s getting thrown around more is what gets to 90 million acres first, soybeans or corn? Most estimates continue to sway between 87 and 89 milllion acres for soybeans and 90 and 91 million for corn, but depending on how weather conditions shape up in the next 6 weeks, there’s about 2 million acres that could swing either way in my opinion (if early conditions are good, most expect more corn to go in). There’s definitely a profitability factor that one can consider as farmers consider what is going to give them the best return on their investment, and if the banks have any say, there’s more emphasis on bean acres. Some grain marketing gurus are suggesting to target a 10% ROI in 2017 and 20% – 30% in 2018 if you’re a corn, soybean, or wheat farmer, begging the question that we ask every spring, “do you know your cost of production?”
We here at FarmLead continue to ask this critical question and more in order to help farmers get a better ROI on their crops. As such, we’re proud to announce today that FarmLead has raised $6.5M USD from some great investment partners to help us change the way grain is sold today and in the future.
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