FarmLead Breakfast Brief
Monday, November 7th, 2016
“Knowledge is an unending adventure at the edge of uncertainty.”
– Jacob Bronowski
At 6:55 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3382 CAD, $1 CAD = $0.7473 USD)
Dec Corn: -0.5¢ (-0.15%) to $3.483 USD or $4.66 CAD
Jan Soybeans: +9.3¢ (+0.95%) to $10.00 USD or $13.382 CAD
Dec Soybean Meal (per short ton): +$3.20 (+1.05%) to $312.20 USD or $417.77 CAD
Dec Soybean Oil (cents per lbs): +0.24¢ (+0.7%) to 34.95¢ USD or 46.77¢ CAD
Dec Oats: -1.8¢ (-0.75%) to $2.265 USD or $3.031 CAD
Dec Wheat (Chicago): +1¢ (+0.25%) to $4.153 USD or $5.557 CAD
Dec Wheat (Kansas City): +1¢ (+0.25%) to $4.125 USD or $5.52 CAD
Dec Wheat (Minneapolis): -0.3¢ (-0.05%) to $5.10 USD or $6.825 CAD
Jan Canola: +1.6¢/bu / +$0.70/MT (+0.15%) to $8.628/bu / $380.45/MT USD or $11.546/bu / $509.10/MT CAD
Friday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.156 USD or $2.885 CAD
Dec Milling Wheat: -2.7¢ (-0.45%) to $4.535 USD or $6.069 CAD
Grains this morning are mostly mixed while outside markets are green on news that the FBI won’t be pressing charges against U.S. Presidential candidate, Hillary Clinton (more on the election further down). India is keeping its wheat import tax at 10% from the 25% it used to be before a cut in September as private imports are expected to climb to 3M tonnes this year, the largest amount in a decade (and already include 1.2M tonnes already bought, mostly from Australia). In Egypt, the government has decided to float its currency in order to meet economic conditions set by the International Monetary Fund in order to get a $12 Billion loan. However, the result has been a 50% devaluation in the Egyptian pound literally overnight, and combined with Cairo updating its domestic wheat price to about $193 USD / MT versus $311 last week, those trying to smuggle in Black Sea wheat and pass it off as domestic wheat won’t be able to do so any more. Oh the uncertain times it is to be a wheat smuggler in Egypt!
Hedge funds are getting a little longer in Kansas City hard red winter wheat futures as dry yet windy conditions over the past 3 months across Kansas, Colorado, Nebraska, & Oklahoma as emerging crops have a blue-ish hue to them, an indicator of moisture issues and a precursor to a sub-par harvest. The market is also getting more bullish on oats as well as it’s been suggested about 25% of the Canadian crop hadn’t been harvested going into this past weekend and we’ve seen some good sale opportunities for the next block of oats (recommendation is out to post yours on FarmLead). While we’re seeing new yearly highs in the oats market, durum prices for #1 and #2 quality is bumping up, validating our call for the past 2 months to hold on to this stuff. We’ve seen $9 CAD / bushel trading in southern Saskatchewan but we expect the highs to be seen within the next 5 weeks or so (get your next block posted on FarmLead and make to include all quality specs, especially HVK, vomitoxin, and protein levels).
BrasilAgro has confirmed what Bunge and ADM said in their quarterly reports: Brazilian farmers are well behind forwarding selling the soybean crop that they’re seeding right now. The agribusiness information firm suggests that Brazilian farmers have only forward sold about 43% of expected production, versus 64% a year ago. While Bunge and ADM contest that it’s only about half of what was done a year ago (and a reason blamed for a poor quarter in South America for both companies), research firm IMEA says that Mato Grosso farmers are 28% sold, versus 48% this time a year ago. The reason for this slower sale level is mainly because the Brazilian Real has appreciated over 16% against the U.S. Dollar in the past year, meaning local cash prices are much lower year-over-year compared to soybeans on the Chicago futures board actually up almost 16% since 4Q2015.
This week is guaranteed to be one for the history books for a few reasons. Not only will a record amount of North American acres be harvested in the first 10 days of November (mainly because of the delayed progress in Western Canada), but also because of tomorrow’s U.S. Presidential Election & Wednesday’s W.A.S.D.E. report from the U.S.D.A.. While most polls are suggesting Hillary Clinton will occupy the Oval Office through to 2020, there’s dark clouds of scandal / corruption around her, making no guarantee that she’ll keep her seat as P.O.T.U.S.. Conversely, if Donald Trump manages to win some of the urban vote (if the 2012 vote count was an indication, Trump has rural America locked up) and starts drawing up plans to move into the White House, you can expect the U.S. Dollar to depreciate violently. Simply put, Mr. Trump represents a lot of uncertainty and if history is an indicator, any doubt in the CEO of a company usually results in their share price heading lower (the CEO here being the U.S. President and the company being the United States of America).
P.S. if you’re not in the field finishing up your combining this week, stop by our booth in the Prairie Pavilion at the Agri-Trade show in Red Deer, AB (same place as last few years) to have one of the FarmLead team members walk through the new FarmLead app with you and talk about your grain marketing plan over the winter.
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.