May 25 – Getting Friendly?

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FarmLead Breakfast Brief

Thursday, May 25th, 2017

“It is easy enough to be friendly to one’s friends. But to befriend the one who regards himself as your enemy is the quintessence of true religion. The other is mere business.”
– Ghandi (India civil rights leader)

Good Morning!

At 7:30 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3463 CAD, $1 CAD = $0.7428 USD)

July Corn: +1.5¢ (+0.4%) to $3.728 USD or $5.003 CAD
July Soybeans: +2.8¢ (+0.3%) to $9.51 USD or $12.763 CAD
July Soybean Meal (per short ton): +$0.70 (+0.25%) to $307.10 USD or $412.16 CAD
July Soybean Oil (cents per lbs): +0.16¢ (+0.5%) to 32.44¢ USD or 43.54¢ CAD  
July Oats: +3.3¢ (+1.35%) to $2.418 USD or $3.245 CAD
July Wheat (Chicago): +1.3¢ (+0.3%) to $4.338 USD or $5.821 CAD
July Wheat (Kansas City): +2.3¢ (+0.5%) to $4.35 USD or $5.838 CAD
July Wheat (Minneapolis): +2¢ (+0.35%) to $5.63 USD or $7.556 CAD
July Canola: -1.1¢/bu / -$0.50/MT (-0.1%) to $8.841/bu / $389.83/MT USD or $11.866/bu / $523.2/MT CAD

Yesterday’s Winnipeg ICE Close
July Barley: unchanged at $2.239 USD or $3.005 CAD
July Milling Wheat: +13.6¢ (+2.1%) to $4.948 USD or $6.641 CAD

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Getting Friendly?

Grain markets this morning are mostly in the green on more buzz around RePlant or Delayed Plant 2017 and a lower U.S. Dollar. Conversely, new crop canola on the November contract is below $500 CAD / MT as the Canadian Loonie is higher after the Bank of Canada kept its key interest rate unchanged at 0.5% (although house market bubble talk for the Great White North continues). Following up on some of the discussion yesterday on the potential Glencore-Bunge deal, there’s more than a few who are skeptical that this deal will get done as Bunge is certainly selling when it is down on its knees after a terrible quarter. A great piece out from Tom Polansek in Reuters yesterday morning makes the very astute points that given grain market conditions, you either need to “partner, merge, or wait for bad weather” to try to lift their bottom lines. As farmers are holding onto grain longer and profits for tonne by the grain buyers isn’t the same as a few years ago, only if grain prices go up can you see more happy CFOs and accountants. Other names that are potentially on the selling block (or at least some of their assets) include Louis Dreyfus and the Andersons, but Cargill and ADM seem to be too big (or ripe for antitrust issues) for any deal with the likes of Glencore and its recent friendliness to expand its agricultural holdings.

Seed companies are starting to admit that they are getting historically large requests for additional seed to replant crops that have been n moisture-overload. While it’s far from the replanting done in 1993, it does rank up there, according to some players, as the 2nd or 3rd worst in history. The worst of the worst seems to be in the Eastern half of the American grain belt, stretching from Arkansas up through Missouri, Illinois, Kentucky, Indiana, and Ohio with parts of Illinois and Indiana looking at 10 – 40% of corn fields getting reseeded. It’s been usually recognized that anything after the 2ndweek of June will usually only get you 50% of the maximum yield if you’re planting corn that late, which means that you’re likely going to see more soybeans. This of course supports our call from Tuesday of more bullish corn prices but more bearish pressure on soybeans.

In Canada, a record amount of rain has falling between Toronto and Ottawa this year, making very difficult to even get into the field, let alone try to take on the challenge of replanting. In Western Canada rains yesterday and today in already wet areas of the top half of Alberta and northern grain-producing regions of Saskatchewan will certainly keep air drills parked. These areas, especially Alberta are behind their average planting pace for this time of year and crop insurance deadlines are getting closer and closer with each passing storm system. In the Black Sea, INTL FC Stone is looking at some drier conditions for June and July but this will likely help the pace at which they’re able to get their winter wheat harvest off after some wetter conditions lately.

There is some major opposition out there by farm groups to Trump’s budget cuts as it relates to agricultural support programs. Currently there are no limits on how much acreage a farmer can insure but under the new proposed agenda, a $40,000 limit on crop insurance premium subsidies would restrict people from getting coverage on all their land. Further, the new budget from The Donald eliminates the Harvest Price option on crop insurance, which is extremely important if you consider that 76% of all American farm crop insurance plans last year chose this option.  Needless to say, while some may say the new budget from the White House is dead on arrival, we are certainly cognizant that changes are coming and given the way that things are being portrayed today, the next Farm Bill won’t be too friendly either.

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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