Oct 26 – Are Wheat Exports Worth Noting (or Not)?

Good Morning!

Grain prices are all in the green this morning as the complex looks to rebound from yesterday’s down day that saw only good sales in wheat exports.

“I cannot say whether things will get better if we change; what I can say is they must change if they are to get better.”

– Georg C. Lichtenberg German Physicist)

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Are Wheat Exports Worth Noting (or Not)?

Grain prices are all in the green this morning as the complex looks to rebound from yesterday’s down day that saw only good sales in wheat exports.

Most of the pressure put on grain prices yesterday was due to weak grain exports numbers and a strong U.S. Dollar (one could easily argue that the two are tied closely together!). The subject of grain exports performance was something that we looked at more closely in Wednesday’s FarmLead Breakfast Brief.

Yesterday, the USDA’s export report showed that corn and soybean export sales came in at just 377,500 MT and 213,700 MT respectively; the market was expecting somewhere between 400,000 and 800,000 MT for corn and 300,000 to 700,000 MT for soybeans.

Historically-speaking, U.S. soybean sales, and shipments really start to pick up around now. Thus, through Week 7 of the 2018/19 U.S. soybean crop year, actual soybean exports came in at 1.11 MMT, but that’s down 56% year-over-year. 

U.S. soybean exports are well behind last year's pace

Wheat Exports, Prices at Turning Point?

Chicago December SRW wheat prices hit their lowest in 9 months amidst some slow export activity. While last week’s export sales came within expectations (unlike corn and soybeans), cumulative exports in the 2018/19 U.S. wheat crop year is still tracking 21% behind last year’s pace.  Nearly 7.9 MMT of all types of wheat have sailed out of American ports through the week ending October 18.

There’s been some buzz that some Asian flour mills are trying to lock up supplies at these low prices through the middle of 2019. [1] This would challenge their historical practice of being more hand-to-mouth buyers.

Their rationale is that, with some depressed production and export activity out of Russia and Australia, buying wheat from Canada and the U.S. – the only two reliable sources remaining – would come at a cost. Very explicitly, one trader said there’s an expectation of a supply squeeze after March.

We already know that Australia’s wheat exports to Asian markets – the largest demand center for wheat in the world – are down significantly year-over-year through the first six months of the calendar year.

Australian wheat exports are way behind with a smaller crop

Conversely, non-durum wheat shipped out off Canadian shores are up more than 30% year-over-year at 4.45 MMT through Week 12 of the 2018/19 crop year in the Great White North.

Canadian non-durum wheat exports are preforming well

After six years of consecutive record crops, have we finally reached a turning point for wheat markets and production?

We know that Asian wheat buyers who have operations in Canada are concerned about Canada’s wheat quality this year though, much like many other millers. [2] Given some of the challenges of Harvest 2018, we continue to advocate for getting your grain tested, especially cereals like wheat. Order your grain tests here from any of the independent labs across North America and be proactive in your grain marketing by knowing what’s in your bin.

Have a great weekend!

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 = $1.3153 
CAD, $1 CAD = $0.7603 USD)

Dec Corn: 1.5¢ (0.42%) to $3.625 USD or $4.768 CAD
Jan Soybeans: 2.3¢ (0.27%) to $8.568 USD or $11.269 CAD
Dec Soybean Meal (per short ton): $1.90 (0.62%) to $306.20 USD or $402.73 CAD

Dec Soybean Oil (cents per lbs): -0.6¢ (-0.21%) at 28.33¢ USD or 37.26¢ CAD  
Dec Oats: 3.5¢ (1.22%) to $2.893 USD or $3.805 CAD
Dec Wheat (Chicago): 10.8¢ (2.22%) to $4.980 USD or $6.550 CAD
Dec Wheat (Kansas City): 10.0¢ (2.06%) to $4.965 USD or $6.530 CAD

Dec Wheat (Minneapolis): 6.3¢ (1.11%) to $5.758 USD or $7.573 CAD
Jan Canola: $2.50 (0.51%) to $11.195/bu / $493.60/MT CAD or $8.511/bu / $375.29/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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