Sept 5 – Grain Markets See Volatile September Start

Good Morning!

Grain prices started September trading in the negative yesterday but are bouncing back this morning in a holiday-shortened trading week.

“There is a volatile mix, and that’s because we’re all intense. And there’s no denying that.” – Alex Van Halen (Dutch-American Musician)

GrainCents grain markets analysis

Grain Markets See Volatile September Start

Grain markets started September trading in the negative yesterday but are bouncing back this morning in a holiday-shortened trading week.

As Garrett mentioned in yesterday’s Grain Markets Today column, wheat prices lost about 3% across all three futures exchanges (Chicago, Kansas City, and Minneapolis).

Grain markets are still trying to figure out what to do with the 21.6 MMT of 2018 Canadian spring wheat production forecasted by StatsCan on Friday. Arguably, this is bullish, considering that those numbers are down 3% year-over-year despite acres climbing 9% from 2017’s area.

Corn prices yesterday were able to buck most of the trend though as there are already thoughts that the harvest lows are behind us, given the amount of both domestic and international demand for US corn. [1] There are also ideas that a national average corn yield of 178.4 bushels per acre from the UDSA is likely to get smaller, not bigger. [2] It would be a new record if realized though.

For soybean prices, grain markets are watching what’s going in China with the African swine fever issue. It’s too early to get into too much speculation, but if the very contagious virus spreads, we could see China looking to South America and the EU for more livestock imports. [3] This would likely open the door to more American exports of livestock to those countries, which would, in turn, increase domestic feed demand (something the grain markets are certainly cognizant of).

Grain Markets Mostly Lower in August

Over the weekend, we published the FamLead monthly recap of grain prices for August for the 12 main crops that we cover at GrainCents. Worth mentioning is that only oats, barley, and flax saw prices improve compared to where both July 2018 and August 2017 ended.

Here’s an example of some of the charts we put into the August recap (as well as what we regularly publish for our GrainCents readers). 

2018-08-29-SK-Feed-Barley-Prices

Chicago and Kansas City winter wheat prices have seen the most significant increase year-over-year in the futures-related crops, up 26% and 34% compared to where they ended in August 2017. Barley prices have been the best-performing player though, up 38% year-over-year.

Conversely, the worse performing markets have been in the pulses, which peas, chickpeas, and lentil prices anywhere from 38% to 66% lower compared to what prices were a year ago.

2018-08-29-SK-Kabuli-Chickpea-Prices

While it’s certainly a reality check, the other reality is that most pulse prices have returned to their 5-year averages.

Of interesting note is that canola prices today, compared to a year ago, are almost identical.

Crop Progress Maintains Advanced State

Yesterday’s crop progress report from the USDA continued to show that the US crop maintains its advanced state of growth. [4]

Soybeans good-to-excellent (G/E) rating gained one point week-over-week to 67% while 16% of fields are now dropping leaves. That’s a significant head-start from the 5-year average of 7% for dropping leaves.

For the US corn crop, 75% is now dented, a healthy distance from the 5-year average of 60%. Further, 22% of US corn fields are now considered mature, double the 5-year average. Also, corn’s G/E rating dropped one point week-over-week to 67%

As for harvest, combines are almost finished doing their job in the US for oats (94%), barley (84%), spring wheat (87%), peas (92%), and lentils (82%).

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@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 = $1.3173 
CAD, $1 CAD = $0.7591 USD)

Dec Corn: -0.5¢ (-0.14%) to $3.678 USD or $4.845 CAD
Nov Soybeans: 0.5¢ (0.06%) to $8.438 USD or $11.115 CAD
Oct Soybean Meal (per short ton): -$0.60 (-0.19%) to $308.60 USD or $406.51 CAD
Oct Soybean Oil (cents per lbs): -0.11¢ (-0.39%) at 28.36¢ USD or 36.72¢ CAD  
Dec Oats: 2.8¢ (1.14%) to $2.488 USD or $3.277 CAD
Dec Wheat (Chicago): 4.3¢ (0.81%) to $5.358 USD or $7.058 CAD
Dec Wheat (Kansas City): 3.8¢ (0.71%) to $5.408 USD or $7.124 CAD
Dec Wheat (Minneapolis): 7.3¢ (1.25%) to $5.920 USD or $7.798 CAD
Nov Canola: -$0.60 (-0.12%) to $11.254/bu / $496.20/MT CAD or $8.543/bu / $376.69/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.

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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