Yesterday’s May WASDE produced some relatively bullish numbers but grain prices are all lower heading into the weekend.
“While I believe firmly in open markets and free trade, I also believe an open market needs a level playing field.” – Philip Hammond (British politician)
May WASDE Sets the Playing Field for 2018/19
Grain prices are all in the red this morning despite yesterday’s May WASDE showing some relatively bullish numbers, especially for corn and soybeans.
Yesterday, Garrett provided a live report of the May WASDE report, walking through in real-time what was bullish, bearish, or neutral. When the dust had settled, grain prices on the futures boards were mixed, with corn prices losing about a cent, soybeans adding about a nickel, and wheat prices losing anywhere from 2 to 5 cents.
Generally speaking, the report was neutral for corn in the US but relatively bullish from a global ending stocks standpoint. For soybeans, yesterday’s May WASDE was certainly bullish as the US and global ending stocks are expected to pull back in 2018/19.
GrainCents Review of 2018/19 WASDE Estimates
Yesterday’s WASDE showed updates not only supply and demand numbers for the 2017/18 crop year but also the first balance sheet projections of 2018/19. Specifically for the latter, the USDA only provides estimates in the May WASDE for corn, soybeans, all wheat (and winter wheat), oats, and barley. We don’t get production estimates for durum and spring wheat until July. For the likes of lentils, flax, chickpeas, and peas, those estimates don’t come out until September.
So, for the five crops that were reported on in yesterday’s WASDE, we broke down the full numbers. For those crops that were not reported on, we did some quick math, putting together a benchmark of production using the five-year average of yields and harvested acres as a percentage of planted acres.
Click the links to below to see the 2018/19 numbers for the crops most relevant to you and what it means regarding bullish, bearish, or neutral.
Want to take a test drive of GrainCents for three weeks? Click here to start!
What’s the Weather?
We know that La Nina has come and gone. After all, Argentina is getting rains all of a sudden, which is good for the soil moisture that their barley and wheat crops needed to planted into, but it certainly slows down their corn and soybean harvest. 
So, yes, while La Nina is gone, this means that the pendulum swings back to the El Nino side of the cycle. There are some suggestions that late 2018 weather could trend to more of an El Nino state, albeit that is very speculative at this point. 
In the short-term that are some rains in the forecast that are slowing planting progress down in the American Midwest. Conversely, limited rainfall is expected in Western Canada, which means seeding should be hitting full-tilt this weekend. 
The question though for Western Canada is when the rain will show up? After last year’s drought, the question of precipitation (and thus, soil moisture) is a pretty important one. At least one forecaster, BAMWx is seeing weather models similar to 1986, 2001, 2006, and 2012 for the Canadian Prairies and considers the forecast to be trending drier than usual again.  This doesn’t mean you should lock your bin doors just yet, but it’s something to be cognizant of.
Thinking more long-term, there’s a new tool out from the Prairie Climate Center, the Climate Atlas of Canada.  It suggests that, under extreme climate change, Manitoba might have a growing season by 2050 that’s closer to that of today’s Nebraska. By 2080, it could be more like Texas. Again, take this with a grain of salt as it’s an extreme scenario but something to think about.
In the meantime, let’s continue to focus on this year and get the crop in!
Have a great weekend!