Grain ended the month of July quite choppy as the usual suspects of weather, the U.S. dollar, and Harvest 2015 starting up being exacerbated by the closing of the month of July (meaning funds and other speculators may have looked to clean up their books a bit). Add in funds selling because of deteriorating Chinese markets, there was a convex of factors that merged together to push markets lower.
U.S. Wheat Associates says that this year’s American winter wheat crop is the worst for falling numbers and other quality indicators since 1998! This translates to many winter wheat fields (both hard and soft red varieties) being harvested and earmarked for nothing but feed as vomi and sprouting are keeping it separated from the milling market! However, the Wheat Quality Council started their crop tour this week and found areas in Minnesota, South Dakota, and North Dakota that had the best spring wheat yield prospects in over 20 years at an average yield of more than 51 bu/ac across the 3 states! Digging deeper, durum yields in North Dakota are estimated at 39.2 bu/ac, up from 36.6 last. Prospects for corn and other crops in the Northern Plains are also looking good, including corn crops in Minnesota and Iowa as some timely rains have put crop progress ahead of five-year averages! Overall, despite the various regions that got more than their fair of share of rain in May and June, corn crop prospects continue to look better than once thought, part of the reason we’re seeing such downside pressure on things.
Speaking of downside pressure, good rains to end July in the Canadian Prairies will definitely help yield prospects in a few areas. There’s been some calls that the rains have done as much damage to the crop in some areas as it has helped the crop in other regions. The net-net is a big positive though in my opinion, mainly because it’ll help fill out crops and Harvest 2015 is already early in Western Canada so pulse crops getting started on won’t be adversely affected too much by any delay (although disease needs to be obviously watched – keep Pulse Canada’s desiccant recommendations in mind as you head down that road). Further, the rain significantly improves the soil moisture profile of many areas that have got anywhere from 0.5 to 2 inches over the course of the entire growing season, which is very important for Plant 2016 when you come to think of it (yes, I am telling you that you should already be thinking about this in the back of your mind). Ultimately, getting closer to Harvest 2015 hitting full tilt across the North American markets, recent rains have pushed away spot market buyers to wait for the arrival of new crop supplies. This week’s rollercoaster of technicals and fundamentals weighing against one another have resulted in a new lower positions across the board (and non-board as non-futures market prices are down notably week-over-week including durum and lentils).
To growth,
Brennan Turner
President, 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 now mobile grain marketplace (app available for iOS & Android). 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).