FarmLead Breakfast Brief
Thursday, May 4th, 2017
“One needs their difficulties because they are necessary to enjoy success.”
– A.P.J. Abdul Kalam (Former India Prime President)
At 7:05 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3723 CAD, $1 CAD = $0.7287 USD)
July Corn: -2.3¢ (-0.6%) to $3.725 USD or $5.112 CAD
July Soybeans: -2.3¢ (-0.25%) to $9.73 USD or $13.353 CAD
July Soybean Meal (per short ton): -$1.40 (-0.45%) to $317.40 USD or $435.57 CAD
July Soybean Oil (cents per lbs): -0.03¢ (-0.1%) to 32.53¢ USD or 44.64¢ CAD
July Oats: +4.5¢ (+1.9%) to $2.428 USD or $3.331 CAD
July Wheat (Chicago): -4.3¢ (-0.95%) to $4.498 USD or $6.172 CAD
July Wheat (Kansas City): -4.8¢ (-1.05%) to $4.585 USD or $6.292 CAD
July Wheat (Minneapolis): -0.8¢ (-0.15%) to $5.605 USD or $7.692 CAD
July Canola: +1.1¢/bu / +$0.50/MT (+0.1%) to $8.645/bu / $381.18/MT USD or $11.864/bu / $523.10/MT CAD
Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.189 USD or $3.005 CAD
July Milling Wheat: +10.9¢ (+1.65%) to $4.918 USD or $6.749 CAD
Needs & Wants
Grain markets this morning are again all lower as it give back gains made yesterday, effectively starting the day the same place that we did yesterday morning. While there has been some bullish support found in the names of Rain, Snow, & Frost, the market continues to suggest that the risk has already been priced in accordingly. Moreover, planting conditions for the large majority of fields across North America have greatly improved. China is starting up its corn auctions this week amidst debate over size off their import program (U.S.D.A. is calling for 3M tonnes while the Chinese National Grain & Oils Information Center suggests 2M tonnes; in March only 5,262 tonnes were imported). Brazil’s 1st corn crop and the soybean harvest is basically complete, sitting at 90% and 95% combined. AgResource upped their estimate of the Brazilian soybean crop to 112.1M tonnes, a nearly 2M-tonne hike from their previous estimate. Meanwhile, Informa increased their estimate by 2M tonnes as well to 113M tonnes, but lowered their forecast of the Argentinian soybeans crop by 700,000 to 56.8M tonnes. Finally, the U.N. raised their estimate again for the global wheat crop, expecting the carryout by the end of the 2017/18 crop year to sit at another new record of 247.6M tonnes. Overall, the market’s needs continue to be well-supplied and the rallies that some continue to want and hope (i.e. earlier this week) continue to be reined in.
Day 2 of the Wheat Quality Council crop tour in Kansas across hard red spring wheat country had 205 stops, estimating a yield potential of 46.9 bu/ac, well above the average of 44.9 bu/ac. This is slightly above the 49.3 bu/ac average on Day 2 of last year’s tour which had 300 stops, which has a lot of people up in arms about how this data will be presented and digested because on paper it looks bearish. The formula used to determine yield on this tour counts the number of heads or stalks in a one foot row, but the stuff that was flattened was not counted (instead of being dug out and being guessed on). Simply put, there’s more questions on those fields about whether or not those field lodged or snow-covered will make a comeback and we won’t know for another few days at best (ideal conditions would be a slow warming weather no rain). The brutal thing is the crop insurance bind that some farmers will find themselves in because if the wheat crop failed and it was already headed, they couldn’t buy insurance on a replanted spring crop. Further, the demand for adjusters will spike next week once the 7-10 days needed to understand damage have passed, suggested that those who need an adjuster out may not get one for another 2 weeks, making it tough to decide what to do with the field.
An updated forecast for the month of May from the U.S. Climate Prediction Center suggests that the Corn Belt will see below-average temperatures through the first half of May. Although another moisture system is expected to materialize over the weekend across the eastern part of the Corn Belt, which will start to produce some negative effects on some areas that already got the 3 – 9 inches that fell last weekend. AccuWeather is calling for a pretty dry July and August for a swath of area stretching from southeastern Saskatchewan all the way up to northwestern Alberta. The reason for the their droughty forecast is that there’s no longer a “blob” of warm water off of North America’s west coast which has acted as a catalyst to send moisture systems into Western Canada (and there was a lot of it last year). While the back half of the growing season is expected to be dry, Accuweather expects the Canadian Prairies to get normal precipitation in June (and if their long-term forecast holds true, that precipitation will be needed).
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.