Good Morning!
Grain markets are slightly in the red as the complex pulls back from the big gains made yesterday on slower crop progress and a new NAFTA being signed.
“Procrastination gives you time to consider divergent ideas, to think in nonlinear ways, to make unexpected leaps.” – Adam Grant (American Psychologist)
Divergent Crop Progress, Trade War
Grain markets are slightly in the red as the complex pulls back from the big gains made yesterday on slower crop progress and a new NAFTA being signed.
On Sunday night, a new era of free trade in North America was announced in the form of the USMCA (AKA the United States-Mexico-Canada Agreement). [1] After 14 months of re-negotiations, this new agreement will effectively replace NAFTA.
The new deal doesn’t account for the current tariffs on Canadian steel and aluminum, but it does remove Class 7 pricing from the Canadian milk industry (Canada gave up similar concessions to join the Trans-Pacific Partnership free trade deal amongst Pacific Rim countries).
Amongst the agricultural industry in all three countries, the deal getting signed was welcomed, as preserves open trade in the largest tri-lateral economy in the world. [2]
While it’s healthy to see a trade war between Canada and the U.S. averted, grain markets are starting to also price in the lack of crop progress in North America.
USDA’s Crop Progress
Yesterday afternoon, grain markets digested the weekly crop progress report, which showed that the U.S. corn harvest advanced by 10 points from last week to 26% complete.
As it relates to other factors in the crop progress report, we saw corn and soybean good-to-excellent (G/E) ratings stay flat at 69% and 68%, respectively.
Also, 23% of the U.S. soybean crop has been harvested, up 9 points week-over-week and 3 points ahead of the 5-year average. Rounding out the USDA’s crop progress report was that 43% of the U.S. winter wheat crop had been seeded, up 15 points week-over-week, and also 3 points ahead of the five-year average.
Switching USDA reports, over the weekend for our GrainCents readers, we dug into the Quarterly Stocks report released on Friday.
The agency said that all wheat stocks came in 2.38 billion bushels for September 1. That figure is up 5% from one year ago when all-wheat stocks sat at 2.27 billion bushels. From a quarter-over-quarter perspective, total U.S. wheat stocks decreased 605 million bushels from the 1.1 billion bushels reported for June 1. That disappearance is an 8% decline from last year.
The USDA said that U.S. corn stocks came in at 2.14 billion bushels on September 1. That figure is down 7% year-over-year from September 1, 2017.
The agency said that soybean stocks came in 438 million bushels, up 45% from one year ago when soybean stocks sat at 301 million bushels. This also meant that, for the quarter, total U.S. soybean inventories decreased 781 million bushels from the 1.22 billion bushels reported for June 1. That total disappearance is an 18% increase from the same period last year.
To growth,
Brennan Turner
President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
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