June 20 – Woeful Wheat Prices (Especially in Canada)

Good Morning!

Wheat prices are leading a rebound this morning in the grain markets, after a significant sell-off across the complex.

“Let your hopes, not your hurts, shape your future.” – Robert H. Schuller (American Televangelist)

graincents-trial

Woeful Wheat Prices (Especially in Canada)

Grain markets are back in the green this morning as the complex looks to rebound from the sell-off, led back up by wheat prices.

As Garrett discussed in yesterday’s daily Grain Markets Today, soybean prices cratered below $9 USD a bushel on the Chicago Board of Trade. As he mentioned, the selling has been compounded by the decent start to the US crop.

This has pressured soy oil prices and, in turn, canola prices. Moreover, canola crush margins are reportedly near their lowest they’ve been all year.

Wheat prices continue to perform poorly, pressured by a beautiful spring wheat crop, as well as winter wheat harvest hitting its stride throughout the US.

Rains across the Northern Plains and Western Canada show the benefits. The USDA is currently pegging the portion of the US spring wheat crop that’s rated good-to-excellent (G/E) at 78%. This is up 8 points week-over-week, 37 points higher year-over-year, and well above the five-year average of 65%.

In Saskatchewan, the provincial government is pegging 83% of the spring wheat crop as G/E. That’s up 5 points from two weeks ago and 7 points better than the seasonal average. The Alberta Ministry of Agriculture says that 86% of the province’s spring wheat crop is rated G/E. That’s 5 points ahead of the 81% G/E rating at this time a year ago, and 11 points ahead of the seasonal average of 75%.

Where are we in this Trade War?

Where we once felt terror for a trade war, the grain markets have reacted with full-blown panic. [1] Simply put, no speculator wants to play in this risky game where no one knows what the next move is going to be. Thus, the simple solution is to get out. That’s what you’ve seen as speculators have sold out of their positions. No one wants to play in the sandbox when sand continues to get thrown in their face!

A couple of interesting data points to consider though:

First, at this time last year, the new crop December 2017 contract’s low was seen on June 23 at $3.73 USD/ bushel in Chicago. However, the high was seen a few weeks later on July 11 at $4.17. I’m not saying that this bound to happen again, but rather to point out that grain markets can swing one way rather quickly. We’re seeing that swing to the downside right now.

Second, front-month contract for spring wheat prices is trading at basically the same value that it was 13 months ago. And yet, US spring wheat exports at this time a year ago were moving along at a pretty good clip.

Ultimately, there are more and more people who are getting caught in this trade war, but they certainly do not desire it.

Canadian Wheat Woes Continue

After Japan said that they would temporarily be banning Canadian wheat purchases, South Korea said they too would be halting their interest in Canadian wheat. [2] There’s a lot of negatives that have come out of this, namely spring wheat in Western Canada dropping like a baby giraffe coming out of the womb.

There are still a lot of unknowns! We still don’t know what variety the wheat found in the ditch leading up to an oil well in southern Alberta is! Now that Canadian wheat is in this woeful quagmire, there are four main questions that we answered for our GrainCents readers this morning:

1. How long will the bans last?
2. Second, will other nations join in the suspension?
3. How will this affect U.S. farmers?
4. What is the short-term impact on prices?

What’s certain is that in the times of heightened risk, a need for a robust and disciplined grain marketing plan is a must. Navigating these murky waters can be extremely difficult.

On that note, yesterday we announced our partnership with Family Farms Group, a dynamic organization who supports the profitability and longevity of the family farm. Our partnership will have them see their farms, which encompass more than 1.7 million acres across North America, take advantage of ALL of the tools that FarmLead has to offer, including the Marketplace, GrainCents, and more products that will be announced in the coming weeks and months.

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

 

At 7:00 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3300 
CAD, $1 CAD = $0.7519 USD)

Sept Corn: 1.5¢ (0.41%) to $3.648 USD or $4.852 CAD
Aug Soybeans: 1.3¢ (0.15%) to $8.955 USD or $11.910 CAD
Aug Soybean Meal (per short ton): $1.50 (0.45%) to $337.80 USD or $449.26 CAD
Aug Soybean Oil (cents per lbs): 0.25¢ (0.86%) at 29.22¢ USD or 38.86¢ CAD  
Sept Oats: -0.5¢ (-0.21%) to $2.355 USD or $3.132 CAD
Sept Wheat (Chicago): 5.8¢ (1.18%) to $4.953 USD or $6.587 CADS
Sept Wheat (Kansas City): 7.0¢ (1.40%) to $5.060 USD or $6730 CAD

Sept Wheat (Minneapolis): 7.8¢ (1.39%) to $5.683 USD or $7.558 CAD
Nov Canola: $0.40 (0.08%) to $11.494/bu / $506.80/MT CAD or $8.642/bu / $381.06/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.

Most Recent Posts
Dec. 10 - Grain Markets Reverse Ahead of WASDE
December 10, 2018 Brennan Turner
Grain markets this morning are mostly lower ahead of tomorrow’s December WASDE report, with wheat prices the most notable, pulling back from its significant gains on Friday.
October 4: Corn Prices Edge Higher With October WASDE in Focus
October 04, 2018 Garrett Baldwin
Corn prices ticked higher Thursday as traders and analysts began to speculate on next week’s release of the October WASDE report.