FarmLead Breakfast Brief
Thursday, November 17th, 2016
“If you give me enough time, enough leash, I can become pretty reasonable.”
– Michael Shannon (US Actor)
At 7:00 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3423 CAD, $1 CAD = $0.745 USD)
Mar Corn: +1¢ (+0.3%) to $3.475 USD or $4.664 CAD
Jan Soybeans: +2.8¢ (+0.3%) to $9.885 USD or $13.268 CAD
Jan Soybean Meal (per short ton): +$0.70 (+0.25%) to $311.40 USD or $417.99 CAD
Jan Soybean Oil (cents per lbs): +0.12¢ (+0.35%) to 34.48¢ USD or 46.28¢ CAD
Mar Oats: +2.3¢ (+0.95%) to $2.348 USD or $3.151 CAD
Mar Wheat (Chicago): +3.3¢ (+0.75%) to $4.175 USD or $5.604 CAD
Mar Wheat (Kansas City): +1.5¢ (+0.35%) to $4.223 USD or $5.668 CAD
Mar Wheat (Minneapolis): +3.8¢ (+0.7%) to $5.225 USD or $7.013 CAD
Jan Canola: +5¢/bu / +$2.20/MT (+0.45%) to $8.70/bu / $383.60/MT USD or $11.678/bu / $514.90/MT CAD
Yesterday’s Winnipeg ICE Close
Mar Barley: unchanged at $2.182 USD or $2.928 CAD
Mar Milling Wheat: +2.7¢ (+0.45%) to $4.724 USD or $6.151 CAD
What we do know is that in this downturn, farmers spending less on machinery and trying to save more on inputs, especially fertilizer and fuel (helpful that prices for these 2 variables are substantially lower than what they were 3 years ago!). Speaking of fuel, yesterday’s US ethanol numbers out from the EIA suggests that production is tracking 4% higher than where it was a year ago, making things in line with the U.S.D.A.’s corn-for-ethanol use demand. That being said, University of Illinois economists think that, although ethanol and exports demand are going to be higher this year, it’s actually going to be the feed market that will dictate where prices go from here. The rationale here is that export demand will likely shift and there’s basically a cap (AKA blend wall) as to how much ethanol can be blended in with gasoline.
On that note, with harvest nearing its end in the Midwest, basis is improving as grain has been stored away (“Lock the bins!”) and/or already found a contracted home. One thing to note is that as the U.S. Dollar strengthens, it’s making it harder for traditional international buyers of U.S. grains to pay for it. This is why, if the American Greenback maintains its strength, you can expect that options in South America, Europe, and even Australia and Canada become much more attractive! As such, in their morning note, Allendale Brokers points out that Mexico is pulling back on U.S. grain purchases as the peso continues to pull back against the USD. Further, the U.S. Dollar could gain even more should the Federal Reserve increase interest rates in December, which looks like it will happen! More simply put, a loose leash has led to some strong export numbers thus far, but a tightening of it, thanks to the stronger USD, will possibly give us an ugly look (from the perspective of prices) of really how big this year’s record crop is.
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.