Snappy surprises

This week's FarmLead looks at increased soybean yields.

On Friday, September 11, 2015 (a historic date in its own right), we got the U.S.D.A’s most recent version of their world agricultural supply and demand estimates, and most expectations going into the report were that the world crop soothsayers would keep things relatively mute on a global level, and downgrade U.S. production. Alas, the boys and girls in Washington, D.C. had other plans in mind, specifically, increasing U.S. soybean yields to 47.1 bu/ac, a full bushel above what the market expected. On corn, U.S. yields were felled to 167.4 bu/ac from the previous estimate of 168.8 but still above the market’s pre-report expectation of 166.6 going into the report. Despite the actual number still being greater than the market’s pre-report guesstimates, corn rallied on the day, erasing the losses of the previous 2 weeks. All in all, basically, the U.S.D.A. believes U.S. growing conditions are putting things on track for another big crop domestically (not a huge surprise given the conditions to end this year’s growing season).

Globally, corn carryout for 2015/16 was seen falling more than the market was expecting to 189.7 million tonnes while soybean 2015/16 ending stocks are expected to grow to 85 million tonnes on bigger U.S. and South American crops. When it comes to wheat, the U.S.D.A. followed the lead of many other analysts/firms and raised their production and ending stocks, both domestically and internationally, with the global inventories at the end of this marketing year climbing to 226.56 million tonnes, up from 2014/15’s 211.3 million tonnes.

While more accurate production will be available in another month, given the current outlook of a big global output across all the major row crops, the question is where will demand fit in? For North America, the outlook for corn demand remains relatively bleak, given lower oil prices (affects ethanol), lower exports (thanks to bigger competition from other export players like Ukraine, Argentina, and , of course, Brazil), and softer feed demand (mostly because of the plethora of cheap wheat available). While China recently upped its ante to say that they will continue to buy a lot of soybeans (despite their economic troubles, people still want meat and those piggies need to be fed!). However, much like the situation in the Black Sea regarding strong-domestic/weak international wheat prices, the devaluation of South American currencies to the U.S. dollar has created more buying power for the likes of China from those regions, yet giving those producers a better price domestically.

On that note, we’ve seen prices in Western Canada generally track sideways with the rest of the market but harvest pressures have started to hit some crops, notably flax, durum, and some of the pulse crops, including small red lentils and yellow peas. Rumours continue float around that India’s back teeth are floating with small red lentils purchases while China’s buying may slow a bit as a result of their strong purchasing. Prices in chickpeas continue to be pressured by decent Canadian yields, but also a much bigger acreage and corresponding production number in Australia. Canola and wheat prices should continue to track the broader futures markets but quality coming off this Harvest 2015 continues to be pretty good. Surprisingly, it’s the same theme across all other major growing regions and quality continues to impress.

To growth,

Brennan Turner

President/CEO |

Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting, a risk-free, transparent online and now mobile grain marketplace (app available for iOS and Android). His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email ( or phone (1-855-332-7653).

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