Oct 10 – Crop Progress Inches Along

Good Morning!

Grain prices this morning are slightly in the red as the complex factors in yesterday’s “slower” crop progress report and Thursday’s October WASDE.

“There is no greater impediment to the advancement of knowledge than the ambiguity of words.”

– Thomas Reid (English Philosopher)

 

Test your grain today!


Crop Progress Inches Along

Grain prices this morning are slightly in the red as the complex factors in yesterday’s “slower” crop progress report and Thursday’s October WASDE.

Corn prices received a bit of a bullish wind as U.S. President Trump formally announced that he signed a memo, telling the EPA to lift summer fueling restrictions on E15 use (gasoline containing as much as 15% ethanol). [1] This is more politics than anything though as the White House tries to court Iowan voters ahead of the midterm elections.

For our corn GrainCents readers, we talked about this happening and the impact on corn prices more than three weeks ago though so it’s not much of a surprise.

Going into tomorrow’s WASDE report, there’s a bit of a bearish smell in the air. We’ll be digging into the details more in tomorrow’s FarmLead Breakfast Brief, but the pre-report estimates for ending stocks are as follows:

  • U.S. corn: 1.919 billion bushels (1.774 billion in the September WASDE) 
  • U.S. soybeans: 898 million bushels (845 million last month) 
  • U.S. total wheat: 950 million bushels (935 million was the previous estimate).  


U.S. Crop Progress Slows with Rain 

Yesterday, the USDA released its weekly crop progress report, which was technically a day late because of the holiday Monday. As a heads up, this also means that we’ll get export data from the USDA and CGC a day late as well, on Friday, instead of tomorrow, Thursday.

In the crop progress report, the USDA said that 34% of the U.S. corn crop had been harvested, generally in-line with expectations. For soybeans, 32% of American fields had been combined as of Sunday, which is up 9 points week-over-week, but now behind last year’s pace and the 5-year average of 36%.

Crop Progress Report showed a lower soybean harvest

It’s worth noting that the durum, canola, and flax harvests in Montana and North Dakota inched along last week, with the crop progress report only showing 1-3 point improvements from the previous week.

From a quality standpoint, corn’s good-to-excellent (G/E) rating dropped 1 point from last week to 68%, with some significant declines in the western Corn Belt where rains continue to fall.

Crop progress report showed a slight decline in corn quality ratings

For soybeans, G/E ratings stayed at 68%.

As for winter wheat planting, 57% of the U.S. crop is in, ahead of the market’s 56% pre-report expectation and the 5-year average of 54%. It’s widely considered bearish that these current rains will help replenish soil moisture in areas still looking to recover from a dry year, especially in the Southern Plains.

Canadian Canola the Best Option?  

Australia experienced its driest September on record. Even though there is a little bit of rain that has fallen in the eastern portion of the country recently, this area especially has been paralyzed by the harsh conditions.

This week, the Australian Oilseeds Federation (AOF) said that the 2.66 MMT crop forecast it offered on canola in July is now a “pipedream.”

What’s interesting is that the USDA data shows that Australia is set to export 2.6 MMT of canola/rapeseed this year. However, weather developments and weaker yields clearly will threaten that figure.

The struggling Australian crop has prompted speculation that Canadian farmers may need to ship canola to the Land Down Undaa to help address production concerns. [2] We dug into this possibility for our GrainCents canola readers in detail, and the impact on canola prices.

While in yesterday’s FarmLead Breakfast Brief we talked about wheat exports, Canadian canola exports are tracking 11% below last year’s pace and 14% behind the 3-year average through Week 9 of their 2018/19 crop year. However, it’s worth noting that two dozen boats were waiting to be loaded with grain in Vancouver and Prince Rupert by the end of September. [3]

Perhaps we’ll see a pick-up in exports?

That’s worth noting this because transportation costs have become the big sticking point in Australia. Though Western Australia will produce more than 50% of the canola crop, higher costs to ship this canola to the eastern side of the country are making Canadian canola shipments attractive.

Various analysts have stated it could be cheaper to ship canola out of Vancouver via ocean freight than it is to go by rail from Western Australia to their east coast. This is also true for the likes of Canadian barley and/or U.S. corn, as feed barley prices on the Australian east coast are sitting around $330 USD/metric tonne (or $7.20 USD and $9.30 CAD per bushel when converting tonnes to bushels at GrianUnitConverter.com).

Simply put, between weather issues in the southern hemisphere and trade wars, actual trade flows have been seriously disrupted this year. That being said, there doesn’t seem to be an end in sight and so the game of musical grain trade chairs will continue.

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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