March 15 – Grain Prices Remain Volatile at Mid-Month

Good Morning!

Grain prices this morning are all in the green as the market is rebounding from yesterday’s down day.

“We’re quite volatile as individuals, but that doesn’t work exponentially when we are together. Relationships are about eating humble pie.” – Guy Ritchie (English filmmaker)

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Grain prices this morning are all in the green as the market is rebounding from yesterday’s down day.

Garrett mentioned in his regular afternoon column, Grain Markets Today, that soybean prices fell yesterday and took the majority of the complex down with it. The reason for the decline was a relatively bearish survey of what American farmers will be planting in 2018 (more on this later).

To repeat, all grain prices have recouped their losses this morning, most notably, spring wheat prices.

Where Are Grain Prices Going?

Yesterday in GrainCents, we covered a wide swath of topics of our subscribers, with a lot of attention paid to where prices go from here.

Garrett argued that trade war talk could be a good thing for soybean prices in the short term. He also looked at the current renewable fuel standard and proposed changes, namely putting a cap on the prices for RINs, the paper-traded product that acts as a credit used for compliance to meet RFS obligations.

For our Canadian subscribers, we looked expectations for grain prices moving into the spring and summer months. Cognizant of some of the slower movement of grain this past winter, we looked at where basis levels for canola could head, as well as the basis levels for spring wheat.

We know that Canadian oats prices and movement have remained relatively stable thus far in the 2017/18 crop year. However, is there any opportunity to the upside for oats prices in the next few months?

Sidenote: here are some oats prices that FarmLead credit-verified buyers are willing to negotiate on.

We intuitively asked (and answered) the same question for durum prices and if we can expect strength in the next few months or not.

Bigger US Soybean, Wheat Acres

The big thing pressuring soybean prices yesterday was the release of Allendale’s survey results of American farmer planting intentions. The responses suggest that US farmers will seed a record 91.2 million acres of soybeans. This is more than 2 million acres higher than last year’s area AND what the USDA is currently forecasting. With average yields, this would likely bring in a 4.43 billion bushel American soybean crop. Converting bushels into metric tonnes, this would mean a 120.5 million tonne crop

The USDA is also forecasting 90 million acres of corn, but Allendale’s survey results suggest that 88.5 million acres of corn will be seeded. This would be the lowest level in three years and nearly 1.7 million acres lower than last year’s crop. Based on normal yields, it would still produce a 14.145 billion bushel corn crop in 2018/19 (or 359.3 million tonnes).

For wheat, the total area of all types is estimated by the survey at 46.9 million acres. This is little higher than the USDA’s current estimate of 46.5 million and 900,000 more than 2017/18 American wheat acres. This would suggest a total 2018/19 wheat crop of a little more than 1.89 billion bushels, or 51.5 million tonnes.

Breaking it down, Allendale’s survey suggests 32.55 million acres of winter wheat (down 152,000 from 2017), spring wheat at 11.92 million (up 915,000 acres year-over-year), and 2.42 million acres of durum (up 114,000 from last year).

Second sidenote: on Tuesday in GrainCents, we took a pass at durum acres in both Canada and the US for 2018/19.

If you’re doing the math here, that’s more than 1 million acres more of spring-planted wheat than what was planted in 2017/18. This could intuitively be interpreted as bearish. What’s clear is that fringe acres of corn are going back into spring-planted wheat or soybeans.

While these are early estimates, the USDA’s Planting Intentions report in exactly two weeks on March 29 will give us the real goal posts for grain prices to go off.

To growth,

Brennan Turner

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

 

Due to travel, grain prices futures data is not available this morning in the Breakfast Brief but click here to view them.

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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