FarmLead Breakfast Brief
Tuesday, October 11th, 2016
“Gentleness doesn’t get work done unless you happen to be a hen laying eggs.” – Coco Chanel (French fashion designer)
At 8:00 AM CDT in the North American futures markets (not cash market prices):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3191 CAD, $1 CAD = $0.7581 USD)
Dec Corn: -0.8¢ (-0.2%) to $3.425 USD or $4.518 CAD
Nov Soybeans: +1.3¢ (+0.15%) to $9.558 USD or $12.607 CAD
Dec Soybean Meal (per short ton): +$0.70 (+0.25%) to $298.80 USD or $394.14 CAD
Dec Soybean Oil (cents per lbs): +0.06¢ (+0.2%) to 33.88¢ USD or 44.69¢ CAD
Dec Oats: +2¢ (+1%) to $1.99 USD or $2.625 CAD
Dec Wheat (Chicago): +0.3¢ (+0.05%) to $4.04 USD or $5.329 CAD
Dec Wheat (Kansas City): -1¢ (-0.25%) to $4.06 USD or $5.355 CAD
Dec Wheat (Minneapolis): +0.8¢ (+0.15%) to $5.23 USD or $6.899 CAD
Nov Canola: +5¢ / +$2.20/MT (+0.45%) to $8.115/bu / $357.82/MT USD or $10.705/bu / $472/MT CAD
Friday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.188 USD or $2.885 CAD
Dec Milling Wheat: unchanged at $4.747 USD or $6.26 CAD
Laying It Down
Grains this morning are mostly in the green yesterday’s holidays of Thanksgiving Day in Canada and Columbus Day in America, but oats are leading the way, flirting with the $2/bu handle on the Chicago board for the front month December contract. The U.S. Dollar is currently sitting at its highest levels since late July as more of the market is betting on an interest rate by the Federal Reserve in December and the dwindling likelihood that Donald Trump becomes the next US President. Scattered snow and rain showers are in the mix this week for most grain-producing regions still struggling to take crop off and the NOAA says the above-average precipitation is likely to continue for the next 2 weeks. Managed money pushed their short position in Chicago wheat to a new record thanks to their biggest weekly selldown in the past 3 months as speculators continue to expect at least Chicago wheat prices to remain laid out in the ditch.
C.O.N.A.B. says that Brazil’s soybean crop in 2016/17 could reach 104M tonnes, in line with expectations at the beginning of last year, but drier weather put a lid on output at 95.4M tonnes. On the corn front, CONAB is forecasting up to 83.8M tonnes, a solid 26% bumper from the 2015/16 disaster of 66.7M tonnes (again, due to the dry weather). As a result of limited supplies and soaring domestic prices, the Brazilian government recently announced that they will allow the import of US GMO corn until the first corn crop starts to come off in early 2017 (hurray for demand!). It was pointed out on Twitter this morning that since 1976, average annual corn imports by Brazil has been about 850,000 MT, with a high of 2.5M tonnes last year, so the 1M tonnes of US corn approved could be a healthy of things to come (especially if more livestock players in Brazil jump on the import train).
While we know from last weeks’ U.S.D.A. stocks report that there’s still a lot of wheat available in the U.S., on an export basis both American and Canadian wheat are having to compete with the Black Sea as their record crop is making things tougher on the international trade. Thus, news from the USDA’s Egypt attaché that Egypt will buy a record 11.8M tonnes of wheat this year is music to the ears of Black Sea exporters. Right now, Russian-origin wheat continues to win most Egyptian business these days, but it is also displacing North American, European, and Australian wheat in markets like Nigeria, Bangladesh, and Indonesia. On that note, French wheat exports are down 20% compared to last year through the first 2 months of the new trading year as it’s been estimated that only 25% of the crop is meeting weight of 76 kg/hl, versus 80% of the record crop doing so last year. That being said, the takeaway from all of this is that there’s plenty of feed quality supply that could compete both in the EU and internationally, but France is also importing higher quality wheat (mostly from Romania & the UK), with imports up 70% in the first 2 months of the year to more than 136,500 tonnes.
The wet, snowy weather that was received by the Western Canadian provinces this week still leaves a fair amount of crop in the field.Specifically, in Saskatchewan, per the most recent crop, at least 1.4 million acres of spring wheat, 1.25 million acres of durum, and 2.5 million acres of canola have yet to be combined. Digging a bit deeper, only 10% of this year’s Saskatchewan crop harvested this far has graded #1 CW with 50% grading #2, but about a 1/3 of the crop going as #3 or feed, mainly because of disease. On the whole, it’s been estimated by Drew Lerner of World Weather Inc. that 20% of the major North American grain-growing areas “were soaked by abnormally high precipitation during” September. Overall, with lots of acres left to go and the U.S. harvest for corn and soybeans not yet at 50% (we’ll know later today in the USDA’s crop progress report), weather premium continues to help the market remain elevated. However, tomorrow’s monthly WASDE report will likely show higher soybean numbers and smaller corn numbers, setting the tone of where prices are going to lay through the end of 2016.
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.