Grain markets this morning are mostly green, including canola, which is factoring in the estimate from Statistics Canada of 21.3 million acres getting seeded in Canada this year.
“Society is always taken by surprise at any new example of common sense.” – Ralph Waldo Emerson (American author)
Grain markets this morning are mostly green, including canola, which is factoring in the estimate from Statistics Canada of 21.3 million acres getting seeded in Canada this year. Conversely, wheat prices are all in the red as beneficial soil moisture in the Southern Plains and bigger acres in Western Canada are weighing on the complex.
On that note, those acres that are about to get seeded in the Canadian Prairies are a bit dry; Saskatchewan and Alberta especially could use a shot or two of moisture. In that vein, there is a significant fire risk for most of Saskatchewan, as the map below shows. In addition to the 30 rural municipalities that currently have a fire ban in place, there already is a “significant” wildfire burning in west central Saskatchewan near Biggar. 
As a contrast to the Canadian Prairies, you can tell in this other map that the soil moisture conditions across most of the Northern Plains and Midwest are sitting well above-average. For the Plains, more rain is in the short-term forecast, but drier/warmer weather is expected as we flip the calendar into May.  It’s been a little over a month since some flooding started in the American Heartland but experts are suggesting that the water could stick around through the end of May in some areas. 
Statistics Canada: More Wheat, Less Canola
This morning we got the first acres estimate for Canadian Plant 2019 from Statistics Canada.  Going into the report, expectations were that we would see less canola and more spring wheat as a result of the political spat with China that would limit canola exports.  Accordingly, the phonecall surveys by StatsCan basically concluded that we’ll see more wheat, corn, peas, and oats in Plant 2019, and less canola, soybeans, and lentils.
While I mentioned in Monday’s FarmLead Breakfast Brief that wheat prices are likely going to have a tough go in 2019/20, given the rise in global acres, feed barley prices have been a bright spot, and that’s why you’re seeing the significant increase year-over-year. Also, the debate in the pulses rages as the question of whether lentil or pea prices will pay better in 2019 continues to come up. Given this morning’s acreage estimate from Statistics Canada, farmers are leaning into more peas than lentils for the first time since 2014.
As you can tell from the table above, except for durum acres, the area planted into cereals is up across the board. I still think that Canadian barley acres could increase from the 7.1 million estimated by Statistics Canada this morning. That could come at the expense of fewer canola acres than the 21.3 million suggested by StatsCan.
Overall, Plant 2019 has started in the drier, more southern areas of Western Canada and what’s certain is that these numbers from Statistics Canada will change before the combines come out in August. That said, I don’t think Statistics Canada’s estimates for Plant 2019 are too far off from what we’ll actually see. While these estimates from StatsCan are just for acres, it’s important to note that Statistics Canada tends to see their production numbers trend higher as the growing season crawls along.
Don’t Forget About Argentina
While a lot of focus of the grain markets are on the different reports for North America that the likes of Statistics Canada and the USDA are producing, South America is sitting on the backburner as its harvest finishes up.
In Argentina, AgriCensus reports that soybean crush is slowing as a larger-than-expected soybean harvest has forced processors to improve their de-hulling process in order to meet minimum protein requirements. The higher yields of the soybean harvest there have also come with lower protein levels, meaning crushers must remove more of the hull of the bean in order to get to the 45.5% protein level desired in soymeal. And the results are clear: 2.9 MMT soybeans were crushed in Argentina in March (or 106.6 million bushels if converting metric tonnes into bushels), well behind the 3.5 MMT expected. Another byproduct of this slower crush pace is that less soy oil gets produced.
In the corn market, AgriCensus also reported last week that corn prices in the South American country were strong, but the premium above Chicago futures levels was declining. The positive corn basis in Argentina is facing some competition from neighbouring Brazil. Also impacting corn prices though in Argentina is currency issues as the local peso has lost half of its value against the U.S. Dollar in the past year. Quite literally, the official exchange rate between the two currencies is currently 42 pesos to 1 U.S. Dollar, which is more than just a tumble from the rate of 20:1 seen at this time a year ago.
On that note, thanks to this currency depreciation, it’s likely that Argentina’s government will increase export taxes on agricultural goods, namely soybeans. We already know that the agricultural community in Argentina has lost a lot of its love for President Mauricio Macri since when he was first elected back in 2015.  Macri came into power on the promises to lower export taxes, but the fiscal situation in Argentina – namely its loan agreement with the International Monetary Fund – likely means that those revenues are badly needed. As such, many of the major farm/agriculture groups in Argentina are not expected to support Macri in this year’s October federal election.
However, a new, non-populist candidate has not emerged and the farmers aren’t interested in bringing back in a government who is widely expected to raise export taxes. As such, the agricultural community in Argentina could easily revolt-vote, meaning that they will vote for Macri again just in order to make sure an export-tax government doesn’t gain power again.
At 8:05 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.344 CAD, $1 CAD = $0.7441 USD)
July Corn: +0.5¢ (+0.15%) to $3.608 USD or $4.848 CAD
July Soybeans: +1.3¢ (+0.15%) to $8.768 USD or $11.783 CAD
July Soybean Meal (per short ton): +$0.60 (+0.2%) to $305.10 USD or $410.05 CAD
July Soybean Oil (cents per lbs): +0.1¢ (+0.35%) to 28.47¢ USD or 38.26¢ CAD
July Oats: +1.3¢ (+0.45%) to $2.84 USD or $3.817 CAD
July Wheat (Chicago): -3.8¢ (-0.85%) to $4.41 USD or $5.927 CAD
July Wheat (Kansas City): -5.3¢ (-1.25%) to $4.158 USD or $5.588 CAD
July Wheat (Minneapolis): -5¢ (-0.95%) to $5.145 USD or $6.915 CAD
July Canola: +1.6¢ (+0.15%) to $10.133/bu / $446.80/MT CAD or $7.54/bu / $332.44/MT USD
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