Sitting high

This week's FarmLead look at a boos in grain markets due to several factors.

Grain markets got another boost to its spring rally on Friday, June 10 with the U.S.D.A.’s monthly reporting of their world agricultural supply and demand estimates. Some warmer temperatures are in the forecast for the middle of June across many parts of North America’s major growing regions, but sporadic rains are limiting the concerns.of negative effects on crop development. Between the watching of the weather and the switching of some numbers of the demand side of the table, the market continues to sit at yearly highs.

On the demand switch side of things, well-known South American production issues pushed the U.S.D.A. to give more business to U.S. corn and soybean tables. Specifically, U.S. corn ending stocks were still seen at a massive 2 Billion bushels by the end of the 2016/17 marketing year while U.S. soybeans carryout was decreased by 45 million bushels to 260 million. For the current crop year, almost 100 million bushels were trimmed from corn for a 1.8 Billion carryout by the end of 2015/16 while 30 million bushels in demand were added to soybeans, equating to a new carryout number of 370 million bushels. Overall, between the aforementioned weather premiums and demand switching to North America, the bullish sentiment seems right but there are definitely still many unknowns at this point in the growing season.

Wheat was the row crop that got sewered in the report by further larger-than-expected inventories. 2016/17 ending stocks in the U.S. were increased to 1.05 Billion bushels, thanks to production being bumped by almost 80 million bushels to a massive 2.08 Billion bushel crop. This upgrade to the U.S. crop accounted for most of the change on the world wheat balance sheet, except for Russia’s wheat crop upgraded by 1 million tonnes to 64 million tonnes, which meant their exports were increased by 500,000 to a massive 25 million tonnes in 2016/17. The other interesting caveat on the wheat front was the E.U.’s crop size getting upgraded by 1 million tonnes to a 157.5 million tonne crop. This contrasts some of the negative headlines on France’s rainfall over the past couple of weeks.

All the focus now seems to be on weather for the next few weeks, and the June 30 Acreage report from the U.S.D.A., which should show just how many soybeans got bought in the last couple of months. Canola will enjoy some continued to support from soybeans, as well as from the fact that Malaysian palm oil stocks continue to sit at 5-year lows. Ultimately, wheat continues to enjoy the bullish pull from corn and soybeans but with new crop supplies coming online with winter wheat harvests, the fundamentals remain bearish. As for corn and soybeans, the reason for its rise to greatness continues to be spec buying and U.S. demand substitution. Until the crop is a bit more emerged we’re likely to see a few more days/weeks at these high levels.

To growth,

Brennan Turner

President & 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 250,000 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

Rural crime task force results released at Agri-Trade luncheon

Report cites problems with police not being able to keep up with crime and justice system issues

PHOTO: Ponoka’s St. Augustine JV girls win volleyball league

The team had a great finals winning in two sets in Ponoka

Ponoka’s annual holiday gala, fundraiser just days away

2018 Festival of Trees in support of operations at the Ponoka hospital set for Nov. 15 to 17

Ponoka’s senior Broncs lost a tough consolation to Wetaskiwin

Penalties and errors in play affected Ponoka, which ended up deflating the team’s momentum

Woman in theft of CN truck from Ponoka pleads guilty

Sentencing not set as the woman heads into intensive one year drug treatment program

VIDEO: Marvel Comics’ Stan Lee dies

Marvel co-creator was well-known for making cameo appearances in superhero movies

Feds dropped ball with WWI anniversary tributes: historians

Wrote one historian: ‘Other than the Vimy Ridge celebration … I think they have done a very bad job’

Sides ‘far apart’ in Canada Post talks despite mediation, says union

The lack of a breakthrough means rotating strikes will resume Tuesday

Feds’ appeal of solitary confinement decision in B.C. to be heard

Judge ruled in January that indefinite such confinement is unconstitutional, causes permanent harm

Nunavut urges new plan to deal with too many polar bears

Territory recommends a proposal that contradicts much of conventional scientific thinking

Tentative deal reached in NHL concussion lawsuit

More than 100 former players accused the league of failing to better prevent head trauma

Grim search for more fire victims; 31 dead across California

More than 8,000 firefighters battled wildfires that scorched at least 1,040 square kilometres

Politicians need to do better on social media, Trudeau says

Prime minister suggests at conference in Paris some are trying to use technology to polarize voters

Bells of Peace toll 100 times in Castor

Commemorates the 100th anniversary since the end of the First World War

Most Read