May 2 – Back on Track?

fl_hubspot_logo_456x57.png

FarmLead Breakfast Brief
Tuesday, May 2nd, 2017

“It’s very easy to lose track of the environment around you, to lose touch with the present.”
– Doug Aitken (US artist)

Good Morning!

At 6:50 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3663 CAD, $1 CAD = $0.7319 USD)

July Corn: -1.5¢ (-0.4%) to $3.76 USD or $5.137 CAD
July Soybeans: +6.3¢ (+0.65%) to $9.765 USD or $13.342 CAD
July Soybean Meal (per short ton): +$1 (+0.3%) to $319.60 USD or $436.67 CAD
July Soybean Oil (cents per lbs): +0.19¢ (+0.6%) to 32.35¢ USD or 44.20¢ CAD  
July Oats: -0.3¢ (-0.1%) to $2.393 USD or $3.269 CAD
July Wheat (Chicago): +2.3¢ (+0.5%) to $4.583 USD or $6.261 CAD
July Wheat (Kansas City): +5.3¢ (+1.1%) to $4.75 USD or $6.49 CAD
July Wheat (Minneapolis): +2.8¢ (+0.5%) to $5.655 USD or $7.726 CAD
July Canola: +4.3¢/bu / +$1.90/MT (+0.35%) to $8.655/bu / $378.76/MT USD or $11.6737/bu / $517.50/MT CAD

Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.199 USD or $3.005 CAD
July Milling Wheat: +10.9¢ (+1.65%) to $4.88 USD or $6.668 CAD

This recent weather has pushed up grain prices…
How much of a weather rally do you need to see?
Step your game up with FarmLead & post a target!

Back on Track?

Grain futures this morning are still mostly in the green as the market continues to try to digest this past weekend’s weather and what sort of impact it will have on production. Wheat prices haven taken the pictures and weather reports in stride as it’s already been estimated that 100M bushels could have been lost, albeit many analysts are already discounting that number, saying it’s too high. As is usually the case, when a one-off / surprising event like this happens, the extremist views are shown and so the photos/news of devastated crops (and don’t get me wrong, it is devastating) are taken as gospel, with many thinking that’s where it must be everywhere. However, the shot of moisture will be a good thing for more than a few areas in the Southern Plains. Needless to say though, the price of wheat does warrant a move higher after an event like this and it might just the hiccup to help prices get back on track to profitable levels. Nevertheless, we’re just questioning what value will the market now justify given the supply that’s still out there and how much of the short position will get covered to help rally things? As such, we remind one of grain marketing mantras: “sell on the rumour, profit on the fact.”

Speaking of weather, it’s easy to confirm that the dry season has started in Brazil as rains continue to get pushed north into jungle areas and away from the crops. This is usual for this time of year but the southern Brazilian areas are still fairly dry from last year but should get a drink later in the week. AgResource reminds us the Brazilian soybean export commitments are tracking about 4% ahead of where they were a year ago with 32.86M tonnes contracted thus far (or about 52% of the U.S.D.A.’s current total year forecast). This being said, with the May W.A.S.D.E. giving us 2017/18 global crop production forecasts, there’s some bearish sentiment out there for what will be shown for soybeans and where prices could head over the next 4.5 weeks of May.

Yesterday’s crop progress report from the U.S.D.A. showed us that 34% of the American crop is now planted, matching the 5-year average but still a bit behind last year’s solid pace of 43% planted by the last weekend of April. Significant progress was seen in Illinois (+29 points to 63% versus 63% a year ago & the 5-year average of 47%), Indiana (+30 points to 45% done versus 26% and 27%), Ohio (+33 to 42% versus 21% and 24%) whereas Iowa is a bit behind (28% versus 55% a year ago and 35% 5-year average). For soybeans, Illinois, Indiana, and Ohio were the big 3 movers last week with completed planting (versus last year & the 5-year average) now at 13% (8%, 6%), 16% (5%, 8%), and 14% (4%, 5%) respectively. . In terms of spring cereals planted (versus last year & the 5-year pace), things are still behind schedule with 31% of spring wheat in (52%, 46%), 32% of barley seeded (55%, 53%), and 47% of U.S. oats acres now planted (54%, 50%).

With 76% of Oklahoma’s and 44% of the Kansas’ winter wheat crops headed, this past weekend’s weather won’t do a lot of favours to anyone, which means, the U.S. winter wheat crop’s national rating of 54% good-to-excellent is a worthless number and sure to change next week. While we know that there was devastating weather, a lot of the snow has melted off in a lot places, including northwestern Kansas (before and after photos). We’ll likely learn more about the damage this week as the Wheat Quality Council’s annual hard red winter wheat crop tour starts today. Further, as mentioned above, the Eastern Cornbelt is ahead of its normal planting pace, so the rain this week could potentially help the recently seeded fields, although given the amount of precipitation that has fallen already, there’s definitely a higher risk of flooding in some areas. That will intuitively mean replanting on more than a few fields, setting back those % planted numbers back a bit. Conversely, some drier weather in the western half of the Midwest could help get those states back on track in terms of progress in the field.

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.

Most Recent Posts
Dec. 10 - Grain Markets Reverse Ahead of WASDE
December 10, 2018 Brennan Turner
Grain markets this morning are mostly lower ahead of tomorrow’s December WASDE report, with wheat prices the most notable, pulling back from its significant gains on Friday.
October 4: Corn Prices Edge Higher With October WASDE in Focus
October 04, 2018 Garrett Baldwin
Corn prices ticked higher Thursday as traders and analysts began to speculate on next week’s release of the October WASDE report.