FarmLead Breakfast Brief
Monday, October 24th, 2016
“Genius is the ability to renew one’s emotions in daily experience.”
– Paul Cezanne (French artist)
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 = $1.3342 CAD, $1 CAD = $0.7495 USD)
Dec Corn: -1.8¢ (-0.5%) to $3.518 USD or $4.693 CAD
Jan Soybeans: +12.3¢ (+1.25%) to $10.045 USD or $13.402 CAD
Dec Soybean Meal (per short ton): +$3 (+1%) to $309.50 USD or $412.94 CAD
Dec Soybean Oil (cents per lbs): +79¢ (+2.25%) to 36.17¢ USD or 48.26¢ CAD
Dec Oats: +0.3¢ (+0.1%) to $2.185 USD or $2.915 CAD
Dec Wheat (Chicago): -0.8¢ (-0.2%) to $4.138 USD or $5.52 CAD
Dec Wheat (Kansas City): +0.8¢ (+0.2%) to $4.223 USD or $5.634 CAD
Dec Wheat (Minneapolis): +1.5¢ (+0.3%) to $5.305 USD or $7.078 CAD
Jan Canola: +14.7¢/bu / +$6.50/MT (+1.3%) to $8.735/bu / $385.17/MT USD or $11.655/bu / $513.90/MT CAD
Friday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.193 USD or $2.885 CAD
Dec Milling Wheat: -2.7¢ (-0.4%) to $4.794 USD or $6.396 CAD
Grains this morning are in the green as combines keep rolling but more short-covering and support for the oilseeds from palm oil prices rising are keeping values elevated. Little rain is expected for parts of Europe over the next few weeks, including in France, southern Russia & Kazakhstan, but the rains seen the last few weeks should help fall-seeded crops. Rains in southern Brazil continue to plague the wheat crop there, with some loss projections as high as 10% of the crop already. On the other side of the country, Safras & Mercado has estimated over 26% of the Brazilian soybean crop has been seeded, versus the 19% average seen around this time. The possibility of $4 corn and $10 beans cash prices in the U.S. is indeed there this year (reminder: there’s a difference between cash and futures), mainly because, despite a record harvest, U.S. farmers seem to be doing a pretty good job of storing crop.
Harvest 2016 progressed over the weekend in the US as corn and beans continue at a healthy pace, while Western Canadian farmers were able to get back into the field in most places to salvage what’s still in the field. While the financial impact to individual farms is evident today, the trickle-down effect through communities and the ag industry won’t likely be realized for a few months. That being said, the market is recognizing how many acres are unharvested, with oilseeds notably climbing lately, including flax up about a $1/bushel in the past monthbut wintering capabilities and European supplies will keep things in check (we’re seeing good sales of $12/bushel on FarmLead – post your next block!). Canola continues to be supported by unharvested acres, decent vegetable oil demand, a very tight soybean balance sheet in South America, and the Canadian Loonie dipping below 75 cents USD this morning (good sale opportunity for the next block).
At least one grain buyer is questioning the validity of the Canadian Grain Commission’s assessment of the quality of the Canadian lentils crop (in addition to calling the CGC “irrelevant” and “they should just hang up their skates”). The CGC suggests that 28% of the crop is grading #1 with another 35% grading #2 quality, or a combined total of 63% of the crop grading #2 or better quality. While I’ll admit that the actual number is likely lower than this, the Saskatchewan Ag Ministry estimated over 6 weeks ago that 46% of the crop would make #2 or better quality (but just 4% making #1 grade). While lentils prices have improved a bit lately, we’re still cognizant of managing price risk and upside moves to winter 2016 new crop bids doesn’t seem likely without a disaster in India (which appears very unlikely today, according to the most recent Indian crop report).
With quality up in the air for Western Canadian crops at least, blending and drying are likely to become more popular this winter,meaning flow-through of grain from country to port could be slower(not including the dependency on railroads). The Western Grain Elevator Association is already calling for most hard red spring wheat to be sold as #2 quality because of vomitoxin issues (CWRS is sold to Japan & the US at 1.1ppm, to the EU at 1.25ppm). Similarly, DON and HVK levels will be the issues challenging durum exports, which the WGEA says most of Canadian supply will be sold as #3, or a #1 by US standards (1.75ppm vomi is max tolerance for European durum imports. Overall, we’ve yet to see said blending and drying really be executed on by many grain buyers and my guess is that the demand out there isn’t justifying it and/or they’re not getting too emotional / are content with the pipeline of grain they do have coming in.
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.