Eyeing new numbers

This week's FarmLead looks at grain market demands rather than weather.

Grain markets are pushing through the middle of August with less focus on weather and more focus on demand numbers. In South America, the limited availability of soybeans in Brazil is putting the U.S. in the so-called driver’s seat for demand until new production becomes available in early 2017. However, Chinese soybeans imports in July were just 7.76 million tonnes, down 18.3 per cent from a year ago, but still a 2.6 per cent pump-up from June’s numbers. This comes as China continues to auction off its state reserves at significant discount, yet they did buy 2.5 million tonnes of American soybeans in the first week of August while U.S. corn beat out South American offers for a South Korean tender. In Canada, canola processors crush numbers totaled 8.27 million tonnes in 2015/16, a healthy 12.3 per cent jump from last year’s 7.36 million tonnes. Ag Canada is currently projecting that we’ll top the 8 million-tonne mark in 2016/17 but with bigger soybean numbers in August’s W.A.S.D.E. report, there will surely be some competition for Canada’s oilseed.

Something more than a few wheat traders are watching is the premium between Chicago and Kansas City boards and the spread between the present and contracts down the road. The distance between the two prices has been quite low as the futures market “worked through” the excess amount of KC-traded hard red winter wheat that came onto market this year with the big harvest in the U.S. Southern Plains. With that in mind, the difference in price between specific months has been narrowing suggesting that, according to the Commonwealth Bank of Australia, “could mean the trade has managed to move the excess wheat forward in time.” With the high level of wheat shorts held by managed money, we might start to see some covering happening, helping wheat prices a bit higher.

Looking across the Pond in Europe, wet weather continues to hamper production and quality potential in the wheat crops, also helping prices. France’s farmers are sitting and waiting as the harvest continues to be slowed by unfavourable combine weather. Currently, only 35 per cent of the French wheat is rated good-to-very good with only 62 per cent of the crop taken off so far, a long throw from the 82 per cent combined by this time last year. With the poorer quality coming out of Europe’s largest wheat producer, feed wheat use across the EU Bloc is expected to climb 3.4 per cent year-over-year to 57.9 million tonnes, the biggest number since 2007-08 and 15 per cent higher than the 5-year average. Furthermore, while corn feed use in the EU will fall to its lowest in 4 years at 57.6M tonnes as it’s more expensive than wheat options.

With the poorer wheat in western Europe, Ukraine is winning the price war when it comes to international trade competition, with export positions sitting at prices that are $100/metric tonne less than Canadian or Australia levels. Granted that Black Sea wheat isn’t necessarily going to buyers who are looking for super high quality, it is something to keep in mind. As we get into Harvest 2016, weather can rear its ugly head and challenge quality and because we know buyers are always looking for high quality, it makes sense to know the numbers of your grain (AKA its’ quality! Get your grain put into sample bags and send away to get tested ASAP).

To growth,

Brennan Turner

President and CEO | FarmLead.com

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 FarmLead.com, a risk-free, transparent online and mobile grain marketplace (app available) that has moved almost 300,000 MT in the last 2.5 years. His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (b.turner@farmlead.com) or phone (1-855-332-7653).


Just Posted

Environment Minister clarifies misconceptions in Bighorn proposal

Minister Shannon Phillips speaks to concerns around the Bighorn Country

Three Ponoka men and one youth charged in assault case

Police obtained a search warrant and located drugs and sawed-off shot gun

Snowfall adds some delay to morning commute

The QE2 and area road conditions in central Alberta were partly snow covered

New market opens in downtown Ponoka

Makkinga Market had a soft opening showcasing many of the different foods in store

Ponoka council challenged on payments on new building

Resident continues worries the town is paying over $94,000 per month on something it may never own

Rare ‘super blood wolf moon’ takes to the skies this Sunday

Celestial event happens only three times this century

Company issues lifetime ban after man jumps from cruise ship

Nick Naydev posted the video last week showing him standing on the balcony of the Symphony of the Seas

Unruly passenger forces B.C.-bound flight to divert to Calgary

Police say charges are pending against a woman in her 40s

Pro-immigration rally planned for Red Deer on Saturday

Rally taking place outside Red Deer City Hall from 11 a.m. to 2 p.m.

Inflation rises as higher airfares, veggie prices offset cheaper gas

Statistics Canada says inflation accelerated to two per cent in December

Bower Place expansion plans underway

Red Deerians can expect Sunterra Market and Marshall’s

Russian fighter jets collide over Sea of Japan, crews eject

One plane crashed after its crew ejected safely, the other crew also ejected but they have not been found

Judge to deliver verdict in British sailor’s gang rape case

The alleged gang rape took place at a Halifax-area military base in 2015

Olympian snowboarder Max Parrot diagnosed with Hodgkin’s lymphoma

Each year in Canada, approximately 900 people are diagnosed with Hodgkin’s lymphoma

Most Read