FarmLead Breakfast Brief
Friday, March 17th, 2017
“A good jolly is worth what you pay for it.”
– George Ade (U.S. author)
Happy St. Patrick’s Day FarmLead User!
At 7:15 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: -0.5¢ (-0.15%) to $3.655 USD or $4.871 CAD
May Soybeans: -0.3¢ (-0.02%) to $10.018 USD or $13.351 CAD
May Soybean Meal (per short ton): -$0.60 (-0.2%) to $328.70 USD or $438.09 CAD
May Soybean Oil (cents per lbs): +0.21¢ (+0.65%) to 32.47¢ USD or 43.28¢ CAD
May Oats: -0.3¢ (-0.1%) to $2.49 USD or $3.319 CAD
May Wheat (Chicago): unchanged at $4.36 USD or $5.811 CAD
May Wheat (Kansas City): +0.3¢ (+0.05%) to $4.503 USD or $6.001 CAD
May Wheat (Minneapolis): -1.8¢ (-0.15) to $5.463 USD or $7.28 CAD
May Canola: -1.8¢/bu / -$0.80/MT (-0.15%) to $8.593/bu / $378.90/MT USD or $11.453/bu / $505/MT CAD
Yesterday’s Winnipeg ICE Close
May Barley: unchanged at $2.238 USD or $2.983 CAD
May Milling Wheat: +2.7¢ (+0.4%) to $4.839 USD or $6.45 CAD
A Jolly Good Time
Grain markets this morning are mixed as the market deals with a lack of fresh headlines to trade off, instead working off of technical and what the U.S. Dollar is doing. A few of the macro headlines being watched include the large supply of oil still available that are keeping prices below $50 USD / barrel and the recent budget proposal from President Donald Trump includes huge budget cuts, including cutting U.S.D.A. funding by 21% (something ag leaders aren’t happy about) and 31% less funds available to the E.P.A.. From a fundamental standpoint, we continue to monitor conditions and rain estimates versus actual precipitation in the U.S. Southern Plains, while buzz is starting to build for the U.S.D.A.’s March 31st stocks and acreage report. Finally, we wish you a Happy St. Patrick’s Day, an event that is celebrated almost like a religious holiday in some places, including the stock market where, in the past 20 years, the market has closed higher 80% of the time on March 17th (will traders be jolly and drinking green beer by the end of the day?)
Despite canola prices faltering this week, Dan Basse from AgResource thinks though that because of the massive supply of soybeans coming down the pipeline, demand could soon switch to canola, with one large factor being how many tonnes of rapeseed oil China has sold from its reserves (it was sitting at 4M tonnes about a year ago). This comes as we’re likely to see record acres get planted in Western Canada this spring, which is concerning to many in the industry as diseases like club-root continue to spread. Switching gears, there’s been a fair amount of wheat tenders lately, including those from Egpyt, Indonesia, and Algeria. This is a good thing in terms of an indication of demand, but the problem is that literally millions of tonnes got offered up, demonstrating that there’s a lot of exportable grain left in the world.
Yesterday we got U.S. export sales data from last week, which showed that U.S. corn demand remains strong with 1.47M tonnes being sold last week, its best number in the last 3 months. On the flip side, U.S. wheat sales last week were the smallest for the 7-day period in the past 8 years! Thus far, 92% of the U.S.D.A.’s wheat export target has been sold, under the 95% 5-year average for this time of year. For corn, 80% of the U.S.D.A.’s 2016/17 marketing year export forecast has been contracted, while 97% of the soybean targets has been locked up, above the 92% average usually seen by now. U.S. soybean export sales have certainly slowed though, what with pressure from South American crops, but also, as Karen Braun of Reuters points out, Chinese crush margins have gone from a 5-year high to a 5-year low in a matter of 3 months, meaning that they may be slowing their interest in buying internationally.
This comes as South America is certainly going to pull off some large crops, especially in soybeans. Positive yields continue to get reported and total production expectations only continue to rise between both Brazil and Argentina. This is mainly because growing conditions continue to be ideal (and better than last year!). Just as the soybean crop comes off in Brazil and 2nd planting / safrinha crop gets put in, in Brazil’s corn belt, rainfall is roughly double that of a year ago (as per AgResource). In Argentina, while things started out quite wet in a few places, drier conditions have persisted and will continue to do so for the next few weeks and although 1 more rain could be ideal before combines get rolling, below-average temperatures will limit the amount of stress plants receive. Given these good conditions, and a few other factors Bloomberg wrote a great article outlining how farming is the best occupation to be in right now if you live in Argentina. It’s not necessarily all roses but it’s likely a bit jollier dynamic than some of the conditions being faced elsewhere (i.e. margin pressure and grain prices in North America).
Have a great weekend!
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.