August 26 – Bigger Than Usual?

In today’s Breakfast Brief we discuss lower than expected corn and soybeans export sales, higher than expected stocks, and the last days fo the Pro Farmer Crop Tour 

“Ideas not coupled with action never become bigger than the brain cells they occupied.”
– Arnold Glasow (US businessman & humourist)

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Good Morning!

This morning grains are lower as the market tests yield expectationsof the Pro Farmer Crop Tour against the current USDA estimates, as well as demand numbers.

Yesterday’s US export sales report showed that both corn and soybean sales came in below expectations, but so far in the new marketing year, we’re well ahead of last year’s pace, indicating some good demand. However, decent pod count numbers from the crop tour and this small sales number pushed soybeans down yesterday below $10/bushel in Chicago, along with canola, which took a hard tumble.

Former Canadian Ag Minister Gerry Ritz points out that the current federal government is taking a scientific, rather than political approach to the canola dockage issue with China and the market appears to pricing in that no resolution will be reached before the September 1st date the new 1% max dockage policy will start. Finally, the media circus that is the Jackson Hole retreat for the Federal Reserve will be trumpeting any hints from the world’s central-est central bank, as to whether the bigger inflation and lower interest rates are going to be the new norm or not.

Wheat And Corn Production Reaches New High?

Speaking of smaller or bigger, the International Grains Council came out with updated production estimates and things continue to grow, calling for record wheat and corn crops of 743 million and 1.03 billion tonnes respectively. While French and German production will lower total output out of Europe, bigger numbers out of the Black Sea, North America, and even South African production jumping 17% year-over-year are contributing to global wheat ending stocks building by 5.5% to 229 million metric tonnes. However, the big question is just how much of this crop will meet milling specs for food consumption, versus competing with corn and other options for the feed market.

High quality wheat hasn’t been readily showcased across world harvests this year, suggesting some protein premiums are available, although not significant enough to open some bin doors. (get your grain tested! Order your SGS test today). That being said, soft rains in northern US states and Western Canada is slowing the pace of Harvest 2016, and just how much it continues to fall this weekend, could push up some premiums on prices, especially in the pulse markets (don’t expect 40 cent small red lentils …. we continue to see smart sales between 33 and 34.5 cents/lbs though on the FarmLead Marketplace. Are yours posted and poised to lock in profits?)

Wrapping Up The Pro Farmer Crop Tour

The Pro Farmer Crop Tour ended last night after 4 days of crisscrossing some of the most productive land in the world. The 4thday of the tour put crop checkers through Minnesota and Iowa. In the latter, the Hawkeye state, the average corn yield was pegged at 188.2 bu/ac, 6.3% above the Pro Farmer’s 3-year average but will need some help finishing out as it’s been wet lately, which is why maybe this number is below the USDA’s estimate of 197 bu/ac (surprising because the tour is usually heavy compared to the government’s call).

In Minnesota, the corn looks to be doing a bit better than the 3-year average, up about 1% to 182.3 bu/ac but not necessarily over the top because of wetter weather (USDA currently at 184 while 2015’s final yield was 190.9). As for soybeans, Iowa pod counts are up 10.6% from the 3-year average to 1224.3 in the 3’x3’ square, while Minnesota beans are also showing promise, up 10% to 1107.6 pods in the average 9 square foot area.

Overall, the Pro Farmer Crop Tour is showing things that are smaller than the what the USDA is currently projecting. To start the season, we were wondering if the US corn crop was going to top 14 Billion bushels, then the USDA is suggested more than 15 Billion was possible, and now it’s possible that the final tally may come in under 15 Billion. Will a final 175 bu/ac corn yield be reached? The US crop isn’t 100% made and the next few weeks of weather could make or break that, especially if states like Illinois are able to push past 200 bu/ac. Nevertheless, between the crop tour and StatsCan’s production estimates on Tuesday, it looks like North American grain production will be bigger than usual.

Have a great weekend and stay safe as we see the finish line of the 2016 growing season!

To growth,

Brennan Turner

President/CEO | FarmLead
1-855-332-7653 (Toll-Free)
1-306-665-8740 (Office)
www.FarmLead.com
@FarmLead (on Twitter)

At 6:10 AM CDT in the North American futures markets:

(all prices in dollars per bushel unless otherwise indicated)

$1 USD = $1.2898 CAD, $1 CAD = $0.7754 USD)

Dec Corn: unchanged at $3.32 USD or $4.282 CAD
Nov Soybeans: -0.5¢ (-0.05%) to $9.75 USD or $12.576 CAD
Oct Soybean Meal (per short ton): unchanged at $321.30 USD or $414.41 CAD 
Oct Soybean Oil (cents per lbs): +0.11¢ (+0.35%) to 33.15¢ USD or 42.76¢ CAD 
Dec
 Oats: -2.3¢ (-1.2%) to $1.868 USD or $2.409 CAD
Dec Wheat (Chicago): -0.5¢ (-0.1%) to $4.233 USD or $5.459 CAD
Dec Wheat (Kansas City): -0.5¢ (-0.1%) to $4.318 USD or $5.569 CAD
Dec Wheat (Minneapolis): -2.3¢ (-0.45%) to $5.023 USD or $6.478 CAD
Nov Canola: +0.9¢ / +$0.40/MT (+0.1%) to $8.089/bu / $369.40/MT USD or $10.433/bu / $460/MT CAD

Yesterday’s Winnipeg ICE Close

Oct Barley: unchanged at $2.33 USD or $3.005 CAD
Oct Durum Wheat: unchanged at $5.508 USD or $7.103 CAD
Oct Milling Wheat: unchanged at $4.453 USD or $5.742 CAD

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.

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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