FarmLead Breakfast Brief
Monday, October 17th, 2016
“I am suffocated and lost when I have not the bright feeling of progression.” – Margaret Fuller (American journalist)
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 = $1.3153 CAD, $1 CAD = $0.7603 USD)
Dec Corn: +2.8¢ (+0.8%) to $3.57 USD or $4.696 CAD
Jan Soybeans: +8.8¢ (+0.9%) to $9.79 USD or $12.876 CAD
Dec Soybean Meal (per short ton): +$1.30 (+0.45%) to $301.90 USD or $397.08 CAD
Dec Soybean Oil (cents per lbs): +70¢ (+2.05%) to 35.08¢ USD or 46.14¢ CAD
Dec Oats: -0.8¢ (-0.4%) to $1.98 USD or $2.604 CAD
Dec Wheat (Chicago): +2.5¢ (+0.6%) to $4.235 USD or $5.57 CAD
Dec Wheat (Kansas City): +2¢ (+0.5%) to $4.198 USD or $5.521 CAD
Dec Wheat (Minneapolis): +1.5¢ (+0.3%) to $5.30 USD or $6.971 CAD
Jan Canola: +9.3¢/bu / +$4.10/MT (+0.85%) to $8.61/bu / $379.62/MT USD or $11.324/bu / $499.30/MT CAD
Friday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.193 USD or $2.885 CAD
Dec Milling Wheat: +8.2¢ (+1.3%) to $4.801 USD or $6.314CAD
Freezing Bright Spots
Grains this morning are again in the green as follow-on buying and short-covering are taking place as hedge funds continue to ditch their bearish bets on corn and wheat. Fund managers are sitting on their most bullish position in WTI oil in the past 2 years, as belief that OPEC will start to cap production might becoming more believable. Temperatures in many parts of the Midwest, East Coast, and southern US will hit 80 – 100 degrees Fahrenheit this week, helping Harvest 2016 get done. Conversely, in Western Canada, with still about 20% of the crop in the field (12M – 14M tonnes of grain?), we’re at a point where it’s a toss-up between wanting snow-melting weather or colder temperatures to freeze the ground. That in mind, freeze temperatures will be seen overnight across the Canadian Prairies but there are some low teens (Celsius) forecasted for the middle of the week. What would you prefer? Answer on our twitter poll!
Staying in Western Canada, the Canadian Transport Minister will have his final meetings with farm groups this week in regards to changes to the compensation railways receive for moving grain. It’s a touchy subject, especially with the problems from the monster 2013 crop still fresh, but the railways continue to argue for a loosening of the rules by phasing out the revenue cap. Switching gears, while we talked last week about some of the action Egypt was seeing, including the low prices offered by US origin wheat, Saudi Arabia finalized its tender today for 610,000 MT of wheat. The 12.5% hard wheat was bought from Germany, Poland, and Lativia for a delivered prices ranging from $206 – $211 USD / MT ($7.35 – $7.55 CAD / bushel).
Soybeans and canola are in the green this morning as they follow corn and wheat, but also because of Malaysian palm oil prices jumping higher. This is because the USDA recently put out a new report that production will rebound from a small crop in 2015/16, but that available stocks will remain tight. This comes as Oil World said a similar thing last week, suggesting that palm oil inventories will be remain tight until March, and that palm oil prices are “undervalued” at the moment”. As substitution effects go, other vegetable oil crops are earning some support as, if palm oil is undervalued, then they must be too! However, we must caution that we don’t feel June levels are obtainable without a significant weather event in South America, butrapeseed prices on the Paris commodity exchange did touch 14-month highs on Friday!
As we start a new week out in the green following on last week’s moves to the upside, will this rally continue? Both you and I know 100% that the answer is “Not Forever”. Yes, we would like to see more upside, and I’m not doubting that there’s some potential for that, but we look at these rallies as opportunities to manage price risk and lock in some profit were possible. Over the weekend we saw some good sales in small red lentils (low 30s cents CAD per lbs) and flax ($12 CAD / bushel triggered), and are also seeing some good negotiations on canola in and around $10.25 – $10.50 CAD / bushel, and #1 and #2 wheats in and around the mid-to-high $6s CAD per bushel (post your block on FarmLead & get in the mix!). When rallies like this start to come around, it’s not the time to freeze up, but take advantage when you can and make it a bright spot relative to where things have been the past few months.
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.