Mar. 9 – All Eyes on the South

FarmLead Breakfast Brief
Thursday, March 9th, 2017

“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”
– Marcel Proust (French author)

Good Morning!

At 7:35 AM CDT in the North American Futures Markets (*not cash prices*)
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3515 CAD, $1 CAD = $0.7399 USD)

May Corn: -0.3¢ (-0.05%) to $3.72 USD or $5.028 CAD
May Soybeans: -5.5¢ (-0.55%) to $10.163 USD or $13.735 CAD
May Soybean Meal (per short ton): -$0.70 (-0.2%) to $330.40 USD or $446.55 CAD
May Soybean Oil (cents per lbs): -0.34¢ (-1%) to 33.20¢ USD or 44.87¢ CAD 
May Oats: -2¢ (-0.8%) to $2.418 USD or $3.267 CAD
May Wheat (Chicago): -1.5¢ (-0.35%) to $4.455 USD or $6.021 CAD
May Wheat (Kansas City): -1.8¢ (-0.4%) to $4.643 USD or $6.274 CAD
May Wheat (Minneapolis): +2.3¢ (+0.4%) to $5.368 USD or $7.254 CAD
May Canola: -2.3¢/bu / -$1.00/MT (-0.2%) to $8.83/bu / $389.34/MT USD or $11.934/bu / $526.20/MT CAD

Yesterday’s Winnipeg ICE Close

MayBarley: unchanged at $2.207 USD or $2.983 CAD
May Milling Wheat: -5.4¢ (-0.85%) to $4.672 USD or $6.314 CAD

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All Eyes on the South

Grains this morning are mostly lower on a stronger U.S. Dollar while the market awaits another monthly W.A.S.D.E. report from the U.S.D.A.. Other than canola, most of the complex was lower yesterday as oil markets plunged more than 5% and rain in U.S. winter wheat areas pressured things. Oil prices dropped after a new U.S. Department of Energy report showed U.S. reserves grew by 8M more barrels last week, way more than the market was anticipating and an indication that U.S. production is rebounding quickly. Lower oil prices helped guide the Canadian Dollar lower, touching a 73 cents USD handle this morning! The lower oil prices, combined with the likelihood of a big Brazilian crop, pushed soybeans lower. Not to be outshone, palm oil continues to trend lower as anticipated production starts to build, not only for major producers like Indonesia & Malaysia, but also India (they tend to import more). Later today we’ll get the U.S.D.A.’s March version of the W.A.S.D.E. and most market participants are expecting only to see substantial changes to the South American numbers.

Going into the report, average estimates for Brazilian soybean production is 106M tonnes, which would be a 2 million-tonne bump from the February report, but there are some guesstimates out there as high as 111M tonnes (i.e. FC Stone at 109M tonnes). In Argentina, the average trade estimate for soybean production there is 55.2M tonnes, which would be a slight drop from the 55.5M tonnes pegged by the U.S.D.A. last month. On the corn front, Argentinian output is likely to hold at 36.5M tonnes while Brazilian production is expected to climb to 87.8M tonnes, a 1.3M-tonne increase from last month and a significant rebound from last year’s drought-riddled crop. Looking more globally, ending stocks are expected to rise for all 3 major row crops, with the world corn carryout pegged at 218.5M tonnes (217.5M last month), 81.5M tonnes of soybeans remaining (80.4M tonnes) thanks to a bigger South American crop, and 248.6M tonnes of wheat (unchanged from last month).

Domestically within America, old crop corn carryout is pegged at 2.32 Billion bushels (unchanged from last month), wheat is basically the same at 1.14 Billion bushels, while soybeans are expected to fall by 2M bushels to 418M available at the end of the current marketing year. If relatively unchanged, the U.S. soybean carryout number will likely be the most debated as strong exports and decent demand thus far have made many market analysts wonder when that U.S. soybeans ending stocks number is going to dip below 400M bushels again. Case in point, Chinese soybean imports for the month of February came in at a record 5.54M tonnes, up 23% versus last February and have bought 32.2M tonnes to date, in-line with the U.S.D.A.’s full-year target of 86M tonnes of the oilseed imported.

Overall, the demand seems to be satisfying current market values and even with record acres likely to be planted in 2017, planting soybeans continues to pay. Given that the major of acreage decisions have been made, there may be 1 or 2 million acres that could swing towards corn if the weather conditions are good, but corn seems to be more of a gamble than soybeans right now. As we get closer to drills rolling though, those switches will be harder to make, but in the meantime, we’ll just have to watch what South American brings to the table.

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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