Oct 9 – U.S. Wheat Exports Slowed by Dollar (or Something Else?)

Good Morning!

Grain markets are slightly lower as the complex tries to factor a strong U.S. Dollar weigh on wheat exports, but not so much for corn.

“Perfection is attained by slow degrees; it requires the hand of time.”

– Voltaire (French Philosopher)


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U.S. Wheat Exports Slowed by Dollar (or Something Else?)

Grain markets are slightly lower as the complex tries to factor a strong U.S. Dollar weigh on wheat exports, but not so much for corn.

Also influencing grain markets today are the wet weather in the U.S. and the continued positive sentiment associated with NAFTA 2.0 – AKA the UMSCA – being completed. You can read our full analysis of how the new NAFTA will impact grain prices here.

Of course, the elephant in the room of the grain markets is the ongoing trade war with China. [1] There is some analysis out there that is justifying the trade war with China as more cracks are starting to show in the economy of the People’s Republic. To help prop things up, China’s central bank is plowing $110 Billion USD into their economy and cut the minimum amount of cash that banks must have on hand (known as the required reserve ratio or RRR) for the fourth time this year. [2]

Conversely, the U.S. Dollar is up nearly 4.5% against all currencies so far in 2018.

Also factoring into grain markets this week is Thursday’s October WASDE report.

U.S. Wheat Exports Slowing?

As of last Thursday’s report, actual U.S. wheat exports through the week ending September 27 have totaled just 6.5 million metric tonnes (MMT). This is down 25% year-over-year and even further below the 5-year average.

U.S. Wheat exports are down 25% year-over-year

This includes U.S HRS wheat exports, which are down 11% year-over-year, sitting at a little more than 2 MMT.

It’s not all bad for U.S. wheat exports though as a little more than 166,000 MT of durum has been shipped out thus far, up 11% year-over-year, albeit still below the 5-year average.

It’s the opposite in Canada though as total durum wheat exports are sitting at 511,300 MT, down 20% year-over-year, as of September 30 or through Week 9 of the 2018/19 crop year.

But Canadian non-durum wheat exports are up 16% year-over-year, now sitting above 3.16 MMT.

Canadian wheat exports are tracking 16% higher year-over-year

Conversely, U.S. corn exports are tracking 50% higher than 2017/18 with 4.57 MMT shipped out thus far.

For U.S. soybean exports though, without China in the buying mix, just 3.1 MMT have been shipped out, down 22.5% year-over-year.

U.S. soybean exports are tracking 22.5% lower year-over-year

We know that without China in the market, sales have certainly slowed down. However, Brazil has run out of soybeans and will need to import soybeans from somewhere, and soon! [3]

Rainy/Snowy Days of Harvest 2018 Over?

Many farmers in Western Canada were thankful for more than just a good turkey meal this past long weekend as clearer skies, and a bit of wind allowed many farmers to get back into fields. There were a few areas that did get snow, which will keep things at a standstill.

Going into the weekend, here’s a breakdown of how much production was left in the field in Western Canada alone (using StatsCan’s satellite-based production estimates):

  • Canola: 10.94 MMT (or 52%)
  • Spring wheat: 9.34 MMT (or 41% of the expected total Canadian harvest);
  • Barley: 2.92 MMT (or 35.5%)
  • Oats: 1.29 MMT (or 38%)
  • Durum: 1.11 MMT (or 19.5%)
  • Flax: 334,250 MT (or 65.5%)
  • Chickpeas: 55,000 MT (or 19.5%)

Even with the Canadian Thanksgiving harvest progress, there are still a lot of fields left to be combined across Western Canada.

Rain fell on most of the Midwest over the weekend, obviously slowing down the U.S. corn and soybean harvest. It’s expected that the wet weather will dissipate towards this coming week.

Thanks to yesterday’s holiday, later this afternoon, we’ll get the USDA’s estimates of how harvest is progress. According to the report, the market is expecting the corn harvest to be somewhere around 32% – 35% complete (26% last week, 5-year average for this week is 37%). For soybeans, the market is also expecting 32% – 35% combined (23% last week, 43% is the 5-year average for this week).

Conversely, winter wheat planting is expected to come in somewhere around 57% – 59%, when it was 48% last week. The 5-year average for this week is 58%. The precipitation will undoubtedly help those U.S. winter wheat fields getting planted, but drier weather is expected towards the end of the week.

To growth,

Brennan Turner

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

At 7:20 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2998 
CAD, $1 CAD = $0.7693 USD)

Dec Corn: -1.0¢ (-0.27%) to $3.660 USD or $4.757 CAD
Nov Soybeans: -4.3¢ (-0.49%) to $8.655 USD or $11.250 CAD
Dec Soybean Meal (per short ton): -$2.20 (-0.69%) to $317.20 USD or $412.31 CAD

Dec Soybean Oil (cents per lbs): -0.6¢ (-0.20%) at 29.58¢ USD or 38.45¢ CAD  
Dec Oats: 1.3¢ (0.47%) to $2.780 USD or $3.614 CAD
Dec Wheat (Chicago): –1.3¢ (-0.25%) to $5.130 USD or $6.668 CAD
Dec Wheat (Kansas City): -1.0¢ (-0.35%) to $5.173 USD or $6.724 CAD

Dec Wheat (Minneapolis): 0.8¢ (0.51%) to $5.898 USD or $7.667 CAD
Nov Canola: unchanged to $11.369/bu / $501.30/MT CAD or $8.747/bu / $385.66/MT USD

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.

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