Grain markets this morning are all green in a risk-off Friday as the trade awaits the USDA monthly WASDE report, published today at 11AM CST.
“Stand straight, walk proud, have a little faith.” – Garth Brooks (American musician)
Will the USDA Set the Supply Record Straight?
Grain markets this morning are all green in a risk-off start as the trade awaits the USDA monthly WASDE report, published today at 11AM CST. Going into the report, expectations are that we’ll see some smaller grain stocks, reflecting the smaller numbers previously reported by the USDA in their quarterly assessment, which was published just last week. Given the amount of technical buying going on in the futures trade, it’s very possible we could see some wild swings in the market today after the USDA releases their October WASDE report.
In a batch of good news for the agricultural industry, the UN’s World Food Programme was awarded this year’s Nobel Peace Prize, recognizing the incredible fact that they provided food for 100 million people last year.  This is fairly important, especially when you consider that global food prices are up 5% year-over-year and 2% higher month-over-month, according to the UN’s FOA food price index.  It’s interesting, however, that with COVID-19 pressuring the food supply chain this year, and food itself becoming more expensive, it’s worth noting that, for the first the 20-year history of Gallup Poll, Americans voted farming and agriculture the top industry in the economy! 
Just a reminder that with Monday being Canadian Thanksgiving and Columbus Day in the U.S., I won’t be writing a Breakfast Brief. That said, to get some of my best insights on all the crops you’re moving, be a top Combyne user this month and you and I can have a private convo on how I’m thinking about grain markets in a few weeks!
Low-Protein Wheat Prices on a Tear
Wheat prices have been acting a bit wild this week on the futures board as speculative money piles into the bullish pressure that the lack of rain is creating. Arlan Suderman of StoneX noted for us yesterday the recently-planted (or will be planted) U.S. HRW wheat crop is facing its driest conditions since 1979! 
In that vein, this week, Chicago SRW wheat prices pushed up above $6 USD/bushel, the first time they’ve done so since July 2015!  This has translated well for those Canadian producers of low-protein wheat, as indicated by where CPS wheat prices are currently sitting in the Prairies. If you’ve got some you’re looking to market, ensure all your bases are covered, and post it on the Combyne trading network today and!
Speaking of wheat and the lack of moisture, Argentina continues to deal with their own dry issues, and with that challenge, it was announced this week that the Argentina government has approved a GMO wheat variety from biotech firm, Bioceres.  In doing so, Argentina becomes the first country in the world to approve GMO wheat, which is something that’s been poo-pooed on many times in the past by many countries/consumers. It’ll be interesting to see how the world reacts to this decision, especially Brazil since the bulk of their wheat imports come from Argentina.
Hungry to Show Your Trading Network Some Grain?
With Canadian Thanksgiving around the corner, if your house is like mine, there’s a turkey to thaw, potatoes to mash (I throw some garlic salt in mine!), and a food coma likely around the corner. But it’s also the time of year when harvest is finished (or damn near close to it!) and we’re starting to look at all our options for selling some grain. As you know, calling around to your trading network to get updated prices, market perspectives, and specific deal terms is quite cumbersome/time-consuming.
No doubt, those conversations are important, but so is your time. That’s why it makes total sense why users of the Combyne Ag Trading Network are posting their deals there, and letting their trading network see all the particulars to the questions that they would ask anyways. This includes deal starters like, “How much do you want to move?”; “What’s the quality?”; “When do you want to move it?”; or “Have a price in mind?”
Instead of repeating yourself over and over again in every single convo, show these terms in a Combyne Listing and your trading network can immediately engage with you with many of their questions already answered. If you’re not exactly sure what to put in your post, we can walk you through how to post the right type of Combyne Listing for your trading network to engage on. Also, the data doesn’t lie: those Combyners that have a larger trading network and lots of Combyne Connections are seeing more deals, and thus getting deals done, and faster!
If some of your trading network is reluctant to join Combyne, you can easily share your Listing with them via text, email, etc., or heck, even Tweet it! Just remind them there are no subscription or transaction fees on Combyne, the conversations are private, and it’s a heck of a lot better in terms of having rich conversations about getting a deal done (versus, again, calling around and repeating yourself in every convo).
USDA Gives Us Another WASDE Report
Going into today’s WASDE report, grain markets already have a good sense of where we ended the 2019/20 crop year in terms of supply, but there are still questions as to just how much corn and soybeans American farmers will bring to market with this year’s harvest. Going into today’s WASDE report, the average guesstimate is that U.S. corn and soybean yields will be 177.7 and 51.6 bushels per acre, respectively. This is down from the 178.5 and 51.9 bpa printed by the USDA in the September WASDE. As a reminder, that report, from a month ago, was friendly for grain markets, largely because of the yield reductions – might we see the same today?
Something to consider, however, is that the market is already pricing in these smaller yields, thus making harvested acres one area that traders will be looking at. The other will be on demand, especially exports, which, for U.S. corn and soybeans, has been pretty strong so far. In Monday’s Breakfast Brief, I dug into the current record pace of U.S. soybean exports, something that the USDA said yesterday is still going strong. More specifically, yesterday, the USDA reported nearly 2.6 MMT of soybean exports sales, which was slightly above expectations. For corn, export sales of 1.23 MMT was within expectations, as was U.S. wheat export sales of 530,600 MT.
But soybeans continue to steal the limelight, largely because of the export sales volumes to date. Quite literally, since the beginning of September (or the start of the U.S. 2020/21 crop year), 40.7 MMT of soybeans (or nearly 1.5B bushels, if converting metric tonnes into bushels) have been bought by international buyers. This is nearly TRIPLE what had been bought by this time a year ago and, for perspective, this amount of sales wasn’t reached last year until May 11th (yes, just 5 months ago, or 8 months into the 2019/20 crop year!). 
The one asterisk here is Brazil, which is facing some of their own dry conditions, just as their soybean Plant 2020 campaign begins.  Nonetheless, CONAB – Brazil’s version of the USDA – is forecasting a new record soybean harvest of 133.7 MMT, or up 7% from last year’s 124.85 MMT, which is the current record. Further, Brazilian soybean exports, as estimated by CONAB, are also expected to be a record in 2020/21 of 85 MMT, or up nearly 4% from 2019/20’s shipments. For comparison, last month, the USDA estimated Brazilian soybean production and exports at 133 MMT and 85 MMT, respectively.
Have a great long weekend!
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 = $1.3141 CAD, $1 CAD = $0.761 USD)
Dec Corn: +3.8¢ (+0.95%) to $3.908 USD or $5.135 CAD
Nov Soybeans: +7.3¢ (+0.7%) to $10.218 USD or $13.593 CAD
Dec Soybean Meal (per short ton): +$0.90 (+0.25%) to $360.50 USD or $473.72 CAD
Dec Soybean Oil (cents per lbs): +0.54¢ (+1.65%) to 33.54¢ USD or 44.07¢ CAD
Dec Oats: +0.5¢ (+0.15%) to $2.933 USD or $3.853 CAD
Dec Wheat (Chicago): +5¢ (+0.85%) to $6.003 USD or $7.888 CAD
Dec Wheat (Kansas City): +5.3¢ (+1%) to$5.34 USD or $7.017 CAD
Dec Wheat (Minneapolis): +5.8¢ (+1.05%) to $5.483 USD or $7.204 CAD
Nov Canola: +10.4¢ (+0.9%) at $11.961/bu / $527.40/MT CAD or $9.102/bu / $401.35/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.