“The few who do are the envy of the many who only watch.”
– Jim Rohn (US motivational speaker)
At 6:30 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3661 CAD, $1 CAD = $0.732 USD)
July Corn: +4.8¢ (+1.3%) to $3.713 USD or $5.072 CAD
July Soybeans: +7.8¢ (+0.8%) to $9.64 USD or $13.169 CAD
July Soybean Meal (per short ton): +$2.70 (+0.85%) to $318.50 USD or $435.11 CAD
July Soybean Oil (cents per lbs): +0.11¢ (+0.35%) to 31.82¢ USD or 43.47¢ CAD
July Oats: +0.3¢ (+0.1%) to $2.283 USD or $3.118 CAD
July Wheat (Chicago): +8.8¢ (+2%) to $4.41 USD or $6.025 CAD
July Wheat (Kansas City): +14.5¢ (+3.3%) to $4.518 USD or $6.171 CAD
July Wheat (Minneapolis): +8.3¢ (+1.5%) to $5.63 USD or $7.691 CAD
July Canola: +1.6¢/bu / +$0.70/MT (+0.15%) to $8.556/bu / $377.27/MT USD or $11.689/bu / $515.40/MT CAD
Friday’s Winnipeg ICE Close
July Barley: unchanged at $2.218 USD or $3.005 CAD
July Milling Wheat: +5.4¢ (+0.85%) to $4.801 USD or $6.559 CAD
Hurts To Watch
Grain markets this morning are starting the month of May all in the green as weather concerns continue to dominate. Over the weekend, the American Midwest and Southern states were hit by some very violent weather, which ranged from tornadoes to flooding to a blizzard conditions hitting winter wheat crops in Kansas, Oklahoma, & Colorado, culminating in more than a few crops likely killed off and tragically, 13 people dead. While the hardest hit areas are expected to dry out, it looks as though there’s more of the wet stuff on the way parts of the U.S. Eastern Cornbelt, Delta, and Great Lakes region (including all of Ontario), with up 4 inches falling in the latter areas this week. Further, there’s some more winter weather advisories that are out there today for parts of Nebraska, South Dakota, & Minnesota. Overall, you hate to see it happen to people (you’ve been there too) but the negative weather hitting these major grain-producing areas is supportive of some higher grain prices.
Tread cautiously, I would say though. The amount of corn, soybeans, and wheat that’s still available for sale will likely limit the ability for rallies to run longer as farmer selling is more likely to stall both basis and general price improvements. Given the busy time of year when air drills and planters can run 24-7, these moves to the upside cannot be ignored and so having your price orders / targets in place is something that should be done today. Yes, today – call your elevator(s) AND post it on FarmLead – more options, the better. Also, thanks to some of the volatile weather lately, stuff that’s still in the bin needs to be given special attention, especially if it was stored at a bit higher moisture level as experts are recommending to run fans as dry air after spring storms could create an ugly mess.
Without this recent weather, some analysts have been a bit skeptical of branding any rallies as “weather-market-driven” because gains before the weekend had been insignificant. Appropriately, a fair amount of the negative weather is getting priced in but as mentioned, there’s a fair amount of grain that’s still out there. We should get a better perspective of things on Wednesday, May 10th, when we’ll get the U.S.D.A.’s May W.A.S.D.E. report, which will show us 2017/18 forecasts. Some analysts are forecasting wheat to see some better values thanks to lower acres and delayed seeding, while the bearish wagons are seemingly circling around soybeans (there’s lots of acres going in, even in Canada!). The driver that could really set markets off though is the covering of the short position that managed money is currently holding. Hedge fund managers are sitting at a near-record bearish position and to unwind it, prices will intuitively have to go higher. Water Street Solutions has gone as far to say “it’s starting to feel like a cigar party in the gun powder room.”
Canadian canola crushed last week was 182,000 MT, hitting about 85% of capacity, and brining total year volume to 6.9M tonnes, up 14% year-over-year (full-year target is 9M tonnes and it looks like that will get hit). Canadian canola exports are starting to slow a bit but it’s also more than likely that the 10M-tonne mark forecasted by Agriculture Canada can be achieved. Those who are skeptical of canola going lower are pointing to the acres that still have to be harvested in Western Canada as well as the seeding delays of 1.5 – 2 weeks compared to last year. What I’m watching though is the drier and colder temperatures in Western Europe, which will negatively affect crops there. While last year’s crop was 20M tonnes (a 4-year low), this year’s potential continues to get downgraded with Strategie Grains calling for 21.4M tonnes and ODA Groupe estimating 20.5M tonnes (as mentioned, the U.S.D.A. will put their first forecast on May 10th). Ultimately, the next 2 weeks will provide us with a good sense of price direction into the middle-to-end of June so manage risk but don’t sit idly by – it’ll hurt more if all you did was watch the rally go by (put up a target today).
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.