September 2 – Jaded Ill Will

In today’s Breakfast Brief, we look at ill oilseed values and wheat harvest levels as well as prices

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Good Morning!

Grains this morning are again pushing into the green despite oil prices having their worst week in the past 8 months, but look to stabilize after Russian president Vladimir Putin put it on the record that he is in favor of a production freeze. While there’s many who hope that oil prices do steady, grain prices remain depressed and there are lots of questions of just how much corn might actually get taken off this year in the US and the implications of what just 1 bushel per acre less could do to the balance sheet (spoiler alert: there’ll still be a lot of grain left over by the end of 2016/17).

With some of this thinking in mind, CHS points out that when US corn yields last saw big jumps in the USDA’s forecast, futures values “posted a low in September and rallied $0.75 – $0.95¢/bushel” by December. Conversely, more analysts think that the 83.7 million acres of soybeans planted in the US this year could see another half a million added to it, meaning, roughly, another 25 million bushels for the balance sheet (and even more ill will towards oilseed values).

Wheat Harvest Picking Up Pace

AgriMer in France recently reported that just 75% of the French wheat crop harvested had a Falling Number better than 240, down 4 points from last week and a sharp contrast to 95% of the crop meeting those specs last year in 2015. On the opposite side of the globe, Lanworth is pegging the Australian wheat production at 27.2 million metric tonnes, thanks to stellar growing conditions (the USDA is currently pegging the Aussie wheat crop at 26.5 million metric tonnes). Looking deeper though, Dutch trader Nidera thinks that this year’s crop could top the 2011/12 record of 29.6 million metric tonnes with possibly more than 30 million metric tonnes if the growing season in the Land Down Undaa finishes strong.

In South America, Brazil is undergoing a leadership change and it’s unclear what sort of impact the new president may have on the burgeoning agricultural industry there. Starting September 15th, Brazilian soybean producers are able to get back into the fields (there’s a planting moratorium til then) but there are some questions around how aggressive acres may be this year due to a tight credit environment and weather (we’ve been suggesting for quite some time that a La Nina event would dampen planting pace in Brazil). Next door in Argentina, AgResource is sticking to its forecast of corn and wheat production increasing substantially in 2016/17 from this past year, with a corn output estimate of 40 million metric tonnes, up from 27 million (+48% YoY) and wheat pegged at 17 million metric tonnes (+55% YoY). Comparatively, Dr. Cordonnier of Soybean and Corn Advisor is pegging Argentinian corn production at 35 million metric tonnes on 25% more acres getting planted this year.

While $4 wheat in Chicago is good for the Argentinian producerthanks to currency effects, it is not helping the North American farmer. Technically speaking for wheat, chartists point out that there’s not many levels of resistance from here to a number in Chicago below $3/bushel. At this point, with a lot of crop coming off – the winter wheat harvest being complete and spring wheat quickly advancing – the only hope for a better value in wheat may be the drop in the US Dollar. The other factor is the premium paid for better quality but with Harvest 2016 not complete, it’s largely unknown exactly what is getting shipped.

Mustard is one of those crops that are looking rather large, but prices are being pressured by a few factors. This includes a bigger crop from the US (Canada’s largest buyer of mustard), more than half a million acres in Canada (+52% YoY), and lacklustre European demand (don’t be jaded – we strongly recommend posting your block of mustard on the FarmLead Marketplace ASAP now for dozens of buyers to see and start dealing directly with you).

Have a great weekend and stay safe as your combines keep rolling.

To growth,

Brennan Turner

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

At 6:30 AM CDT in the North American futures markets:

(all prices in dollars per bushel unless otherwise indicated)

$1 USD = $1.3093 CAD, $1 CAD = $0.7638 USD)

Dec Corn: +3¢ (+0.95%) to $3.268 USD or $4.278 CAD
Nov Soybeans: +7.3¢ (+0.75%) to $9.51 USD or $12.451 CAD
Oct Soybean Meal (per short ton): +$0.50 (+0.15%) to $309.40 USD or $405.10 CAD 
Oct Soybean Oil (cents per lbs): +0.53¢ (+1.65%) to 32.82¢ USD or 42.97¢ CAD 
Dec
 Oats: unchanged at $1.808 USD or $2.367 CAD

Dec Wheat (Chicago): +2.3¢ (+0.55%) to $3.97 USD or $5.198 CAD
Dec Wheat (Kansas City): +3.3¢ (+0.8%) to $4.098 USD or $5.365 CAD
Dec Wheat (Minneapolis): +3.3¢ (+0.65%) to $4.898 USD or $6.406 CAD
Nov Canola: +8.6¢ / +$3.80/MT (+0.8%) to $8.072/bu / $355.93/MT USD or $10.569/bu / $466/MT CAD

Yesterday’s Winnipeg ICE Close

Oct Barley: unchanged at $2.295 USD or $3.005 CAD
Oct Durum Wheat: unchanged at $5.405 USD or $7.076 CAD
Oct Milling Wheat: +8.2¢ (+1.5%) to $4.261 USD or $5.579 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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