FarmLead Breakfast Brief
Wednesday, October 12th, 2016
“The unsuccessful person is burdened by learning, and prefers to walk down familiar paths. Their distaste for learning stunts their growth and limits their influence.” – John C. Maxwell (US author)
At 6:50 AM CDT in the North American futures markets (not cash market prices):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3254 CAD, $1 CAD = $0.7545 USD)
Dec Corn: +0.8¢ (+0.2%) to $3.463 USD or $4.589 CAD
Nov Soybeans: +2¢ (+0.2%) to $9.563 USD or $12.674 CAD
Dec Soybean Meal (per short ton): +$0.70 (+0.25%) to $301 USD or $398.94 CAD
Dec Soybean Oil (cents per lbs): +0.31¢ (+0.95%) to 33.66¢ USD or 44.61¢ CAD
Dec Oats: +2¢ (+1%) to $2.01 USD or $2.664 CAD
Dec Wheat (Chicago): -1.8¢ (-0.45%) to $4.055 USD or $5.374 CAD
Dec Wheat (Kansas City): -2.3¢ (-0.55%) to $4.04 USD or $5.355 CAD
Dec Wheat (Minneapolis): +0.3¢ (+0.05%) to $5.245 USD or $6.952 CAD
Nov Canola: +0.5¢ / +$0.20/MT (+0.05%) to $8.114/bu / $357.78/MT USD or $10.755/bu / $474.20/MT CAD
Yesterday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.177 USD or $2.885 CAD
Dec Milling Wheat: unchanged at $4.723 USD or $6.26 CAD
Grains this morning are mostly higher as the market pulls up its socks ahead of today’s USDA October WASDE report, which is likely to show a smaller corn yield but bigger soybean number. Volatility in the market has created some interesting opportunities this year Some frost warnings are in the mix for tonight across the eastern cornbelt while snow and freezing rain continue to fall in the Canadian Prairie provinces. Chuck Penner from Left Field Commodity Research points out that Canadian pulse crop exports are cruising along, especially peas, but expectations are that things will slow down as 4 out of the top 5 pea exporters globally have both produced more crop and are exporting more. Speaking of exports, Canadian feed wheat exports are starting to compete with Black Sea options, suggesting good competition, but I have to point out a few old familiar foes, “transportation” and “currency”, could impede any significant movement.
A Reuters poll puts average corn guesstimates for tomorrow’s October WASDE report at 173.5 bu/ac (174.4 last month) for 15.06B bushel crop (15.09B last month), pushing ending stocks lower to 2.359B bushels (2.384B last month). For soybeans, average yields are projected to come in at 51.6 bu/ac (50.6 last month) for a 4.286B bushel crop (4.2B last month), and, as a result, ending stocks are expected to climb up to 413M bushels (365M last month). The better question we’re looking to get answered on soybeans though is what sort demand the USDA accounting for on the oilseed, as it’s already up 10% from the UDSA’s first estimates in May! On the wheat front, expectations are that we’ll see ending stocks be raised from 1.1B bushels to 1.153B bushels. Overall, both U.S. corn and soybean crops are seen at record sizes, but it’ll be a question of just how big!
On that note, Todd Hultman from DTN points out that based on historical analysis, a positive September for corn and soybean prices combined with some fresh demand factors means prices are likely to continue appreciate towards the end of 2016. Obviously, any numbers bigger than what the market is expecting today would give the bears some control, but international interest in US corn and soybeans is pretty solid right now. For example, with one month of the 2016/17 marketing year behind us, total sales and shipments of US corn and soybeans are up 87% and 30%, respectively, compared to a year ago. Further, Brazil’s balance sheet is pretty tight so they can’t compete right now and it will be at least February 2017 before any Brazilian ports will be able to export any grain out to international buyers.
Speaking of international buyers, while we mentioned yesterday that USDA’s attaché in Egypt expects the country to buy a record 11.8M tonnes of wheat this year, the USDA attaché in India says that the Asian country will import 3M tonnes, which would be 6x increase year-over-year and the largest since 2006/17. This comes as the private trade is estimating a smaller Indian wheat harvest of between 82-87M tonnes and the government cutting the import duty to just 10%, making it more economical for southern and western millers to purchase overseas. French, Ukraine, and Australian wheat have all be contracted thus far and although I’m sure Russian exporters are trying to get in the mix, the Black Earth Farming operation says that their quality of wheat in Russia is a bit subpar after a very wet August. Despite achieving record yields of 64 bu/ac winter wheat and 41 bu/ac for spring barley, the corporate farm of over 600,000 acres says that there’s lots of feed grains available this year in Russia. Sound familiar to any other region in North America know? (Hint: check Western Canadian and U.S. Southern Plains cereal production this year).
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.