October 19 – (Tough) Grain Price Growing Pains

Grain prices having some growing pains but finding footing?

“Each life is made up of mistakes and learning, waiting and growing, practicing patience and being persistent.”
– Billy Graham (American evangelist)

Good Morning!

At 7:20 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2461 CAD, $1 CAD = $0.8025 USD)

Dec Corn: +1¢ (+0.3%) to $3.488 USD or $4.346 CAD
Jan Soybeans: +0.5¢ (+0.05%) to $9.955 USD or $12.409 CAD
Dec Soybean Meal (per short ton): +$0.70 (+0.2%) to $322.50 USD or $401.87 CAD
Dec Soybean Oil (cents per lbs): +0.04¢ (+0.1%) to 33.45¢ USD or 41.68¢ CAD  
Dec Oats: +0.3¢ (+0.1%) to $2.68 USD or $3.34 CAD
Dec Wheat (Chicago): +1¢ (+0.25%) to $4.31 USD or $5.371 CAD
Dec Wheat (Kansas City): +1.3¢ (+0.3%) to $4.293 USD or $5.349 CAD
Dec Wheat (Minneapolis): +1.8¢ (+0.3%) to $6.118 USD or $7.623 CAD
Jan Canola: -4.5¢/bu / -$2/MT (-0.4%) to $9.166/bu / $404.14/MT USD or $11.421/bu / $503.60/MT CAD

Yesterday’s Winnipeg ICE Close
Dec Barley: unchanged at $2.586 USD or $3.222 CAD
Dec Durum Wheat: -5.4¢ (-0.7%) to$6.093 USD or $7.593 CAD
Dec Milling Wheat: -2.7¢ (-0.45%) to $5.023 USD or $6.26 CAD

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(Tough) Growing Grain Price Pains

Grain prices on the futures board this morning are trying to push into the green.

Buyers are finally coming in after the last few days of weaker prices but there are still growing grain price pains out there.

As Garrett mentioned yesterday in Grain Markets Today, the broader market did well as the Dow Jones hit an all-time high in New York City.

But this record hasn’t helped propel grain prices on the futures market in Chicago, Kansas City, Minneapolis, and Winnipeg.

Corn and Soybean Prices Under Pressure

Corn prices and soybean prices continue to be largely influenced by the pace of the American harvest and conditions in South America.

AgResource estimates that 22% of the Brazilian soybean crop has been planted thus far. [1]

That estimate is in line with the 5-year average. However, it lags last year’s pace of 28%.

Regionally, central and northern states are slightly behind average pace whereas southern areas are ahead of normal planting progress.

Rains are in the forecast for final weeks of October. The wet weather should help alleviate dryness concerns of farmers looking to seed their fields. The market will be watching closely though to see if those rains materialize or not.

If they don’t, we should expect more weather premium to build into soybean prices.

November soybean prices have pulled back from the $10.00 mark seen last Friday in the wake of the WASDE report. This downturn has a few analysts saying that corn would have declined as well because it has “no reason” to rally. [2]

Meanwhile, higher soybean yields are affecting prices as U.S. farmers come off their combines.

While it’s not last year’s record yields, they’re still impressive. [3]

Wild Fires Rage in Western Canada

Numerous grass fires continued to whip around yesterday in parts of Saskatchewan and Alberta.

Winds raged at more than 130 km or 80 miles per hour. [4]

Unfortunately, a well-known, 34-year-old Alberta rancher James Hargrave passed away when the water truck he was driving as a volunteer firefighter rolled. [5]

James leaves behind a wife and young children and a 25,000-acre ranch that has been in his family since 1888.

Please consider joining me in donating a few dollars to a GoFundMe page to assist his family at this difficult time.

Weight on Wheat Prices

What moved wheat prices lower yesterday? Analysts around the globe are increasing production estimates.

But the weight on wheat prices is helping to spur buying interest.

For example, Algeria has purchased 660,000 metric tonnes at a delivered price of roughly $211 USD/tonne (or $5.75 USD and $7.20 CAD per bushel). France provided most of the supply.

Further, Egypt put out its 14th tender of the 2017/18 marketing season.

Russian wheat port prices dropped by a few bucks a tonne in the past week.

On that note, the Russian wheat crop was upgraded by private analyst IKAR. They bumped their estimate to 83.7 million tonnes compared to the USDA’s current forecast of 82 million tonnes.

As a refresher, take a look at our insight on the rise of Russian wheat production and corresponding exports. As a byproduct of Russia’s growth in agricultural production, more grain traders are flocking to the Black Sea to get a piece of the action. [6]

Australia is finally getting some rains. The weather should help the summer crop, but it is slowing the pace of the winter crop harvest. [7] National Australia Bank still thinks that there will only be 18.7 million tonnes of wheat produced in the Land Down Undaa in 2017/18.

This figure would be a 10-year low and half of the monster crop produced last year.

In Argentina, Lanworth raised its forecast for the 2017/18 wheat harvest to 16.8 million tonnes.

Lanworth’s number is still below some other forecasts, but given the rains there, we have a lot of unknowns at this point.

Speaking of which….

 

Argentina Crops Flooded but Not Finished

New estimates out from the USDA’s attaché office in Buenos Aires suggest that anywhere from 12 – 25 million acres of cropland are flooded or severely damaged due to extensive rains. [8]

These rains aren’t like to impact soybeans, but wheat, barley, and even corn acres to a certain extent.

In fact, there’s buzz that Argentine farmers may plant more soybeans than the current USDA estimate of 47.2 million acres, as they opt for a “low-risk and low-cost crop option.”

This is especially true for the growers who will take a financial hit from these rains on their winter crops and so will want to plant a summer crop.

Some analysts like the Buenos Aires Grain Exchange have already dropped its soybean area estimate. Currently, the BAGE is forecasting 44.7 million acres of soybeans this year.

Reminder: South American winters are when North America has a summer, and vice versa. Given their climate, places like Argentina and Brazil and grow two and even three crops a year.

Thanks to record use of fertilizer this year, the USDA attaché does think that average yields for the upcoming crop could come in at 44.3 bushels per acre.

This is an asterisk though as analysts estimate that only 57% of Argentina’s soybean acres are fertilized.

It’s 92% for wheat and 84% for corn.

Total fertilizer use in Argentina is expected to touch nearly 4 million tonnes in 2017. That’s 44% higher than where it was 2 years ago before Argentine President Macri changed policies that incentivized more investment into the nation’s agricultural sector.

Grain Testing Equals Better Grain Prices?

If you want to talk about incentive, how about getting more money for your grain just because you got your grain tested?

Yesterday, FarmLead announced the launch of GrainTests.com in the US. It effectively opens the doors to farmers across North America to easily and effectively get their grain tested from a leading independent lab.

We built GrainTests.com to ensure all farmers have equal access to get an independent assessment of their grain done.

Knowing the quality of you grain allows you to shop for the best possible price more effectively, as discussed by Garrett here.

For the record, FarmLead doesn’t make money off GrainTests.com.

But we do know that when you know your grain before looking to sell it, grain buyers are much more interested in dealing with you because they know the product that’s on the table.

Try it yourself! Get your grain tested and then post it and its spec sheets on FarmLead.com.

To growth,

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

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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