May 16 – Lots of Action

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FarmLead Breakfast Brief
Tuesday, May 16th, 2017

“When it is obvious that the goals cannot be reached, don’t adjust the goals, adjust the action steps.”
– Confucius (Chinese philosopher)

Good Morning!

At 6:55 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3613 CAD, $1 CAD = $0.7346 USD)

July Corn: -1.8¢ (-0.5%)  at $3.66 USD or $4.982 CAD
July Soybeans: +0.5¢ (+0.05%) to $9.658 USD or $13.147 CAD
July Soybean Meal (per short ton): +$0.30 (+0.1%) to $313.60 USD or $426.90 CAD
July Soybean Oil (cents per lbs): +0.04¢ (+0.1%) to 33.06¢ USD or 45¢ CAD  
July Oats: +0.8¢ (+0.35%) to $2.31 USD or $3.145 CAD
July Wheat (Chicago): -2.3¢ (-0.55%) to $4.21 USD or $5.731 CAD
July Wheat (Kansas City): -3.5¢ (-0.8%) to $4.25 USD or $5.785 CAD
July Wheat (Minneapolis): -2.3¢ (-0.4%) to $5.378 USD or $7.32 CAD
July Canola: -1.1/bu / -$0.50/MT (-0.1%) to $8.71/bu / $384.05/MT USD or $11.857/bu / $522.80/MT CAD

Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.209 USD or $3.005 CAD
July Milling Wheat: -2.7¢ (-0.4%) to $4.738 USD or $6.45 CAD

A lot of progress in the field lately but…
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Lots of Action

Grains this morning are mixed again as the market prices in planting pace and reviews weather, with wheat pulling back significantly yesterday on crop potential remaining strong. U.S. corn crop progress continues to be a bit behind the 5-year average while soybeans are matching up nicely as a lot of fields in America got planted last week. Yesterday N.O.P.A. came out with their April soybean crush number, showing 139.1M bushels of American beans were used last month, well below the market’s pre-report expectation of 145.7M bushels. This is the 3rd straight month that crush has run below what it was a year ago (and the worst “miss” of the season), putting total year crush volumes at just 0.8% over last year. To hit the U.S.D.A.’s total year crush forecast of 1.95 Billion bushels, Allendale points out crush volumes from May to August must be 4.6% above last year’s usage. While there continues to be buzz of Chinese buying American beans, this crush number, solid planting progress, and poor export inspections capped any bullish action in soybeans yesterday.

The U.S.D.A’s crop progress report out yesterday shows that 71% of the U.S. corn crop is now seeded, jumping an impressive 34% week-over-week. This means that the market put in over 20M acres of corn in week, meaning that there’s just 26M acres left to plant in America. The most impressive progress was seen in the Northern Plains as Minnesota planted a whopping 49% of its crop in 1 week, South Dakota got in 45%, North Dakota seeded 35%, and corn-mainstay Iowa put in 33% of their acres in just 1 week, putting them 14 points ahead of the seasonal average pace for the state. The aggregate of 71% was a bit above the what the markets were expecting (68%) but still below the 5-year average of 73%. Soybeans seeding development hit 32% as of Sunday, up 18 points from last and in line with 5-year average and also significantly above the market’s pre-report guesstimates of 28%. Spring wheat planted across America hit 78% on Sunday, up 24 points week-over-week, and above both the market’s expectation and the 5-year average of 73%. Oats and barley planting progress has also accelerated to more in line with what the seasonal average is, with 72% and 78% of the crop now planted, respectively. Meanwhile, the crop rating of the U.S. winter wheat crop dropped 2 points to 51% good-to-excellent.

In the Land Down Undaa, farmers have been pleasantly surprised by the success of pulse crops grown in the past year, as incredible yields and a larger acreage, put Australia’s pulse crop receipts in 2nd behind wheat’s value, pushing barley down to 3rd place. This is mainly due to the surprising success of pulse crops grown in fringe areas, especially chickpeas which saw a massive 2M tonnes get harvested in 2016. While the prices have been good (hence the expanded acreage), the demand from the likes of India continues to justify expanded acreage in places like Australia, Canada, and America. For the richest in India, they are spending 2.7% of their food budget on pulse crops while the bottom 5% are spending 4.4% on pulses, and the middle class is spending even more, up to 5.4% on pulses. Staying in India, there continues to be optimism for that India will give a 2-3 year window of reviewing Canadian pulse crop imports without having to go through a fumigation exemption debacle again.

Brazil’s currency, the Real, hit his highest level in the past month yesterday, which continues to put pressure on domestic grain prices (a stronger local currency makes it harder and more expensive for international buyers to purchase). As AgResource points out, the strength of the Real is pushing domestic prices below break-even points for more than a few farmers across Brazil. This in mind, Brazilian farmers have been slow sellers of their soybeans (which is just sitting in their bins) and with the safrinha corn crop just about ready to get harvested, they’re going to have to make a call of either making soybean sales, selling corn off the combine, and/or piling the corn on the ground. From a weather perspective, unseasonal rains continue to fall across Central Brazil but the dry season is expected to start thereafter. This will set things up for a action-packed, fast-paced harvest on a crop that should add up to 96M tonnes total for 2016/17, a 43% jump over last year’s drought-riddled corn crop.

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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