Already questions for next year

Rounding out the middle of November, the markets seemed to pause a bit and then dropped lower a bit as some farmer selling


Rounding out the middle of November, the markets seemed to pause a bit and then dropped lower a bit as some farmer selling increased and probably the last of U.S. corn and soybeans fields getting harvested as by now, most places have too much snow on the ground (have to wait until spring!). While U.S. soybean crush volumes from October show that volumes were up, there is some suggestions that the new crop supply is starting to filter in, which is why the market’s reaction to the higher-than expected number was fairly mute on both canola and soybeans. What shouldn’t fall on deaf ears is that this time of year can be better for fertilizer prices as, according to the Alberta Agriculture Ministry, only once in the past 10 years have prices in the spring been lower. That being said, with the relatively slow and wet harvest of 2014, there’s a lot of questions out there as to what not only to plant next year but what nutrients in the soil need replacing? Do you know?

Wheat has been fairly resilient but we might see prices trade sideways over the course of winter as the record global crop seems be factored in. We’re bound to see some cyclical rebounds towards the spring but geopolitical risk (i.e. I.S.I.S. expanding its geographical control) could also create some selling opportunities over the snowmobiling and ice-fishing months. One interesting variable in the wheat market has been that despite wheat grading not so great, it’s still getting used for baking and milling purposes. Per the Canadian International Grains Institute, those hard red spring wheat grades coming in at three or better because of mildew issues are still making quality breads, although the noodle quality isn’t as great as years past because of poor colour. Ultimately, the world standard when it comes to wheat is based off things like protein and falling numbers and that’s where Canada may be headed over the next few years.

Speaking of trends, ethanol prices have recently climbed to a premium above gasoline in the U.S., creating a conundrum for those refiners who usually get it at a 50 cent/gallon discount. At current corn prices, ethanol margins are roughly $0.90 per gallon! That being said, if demand from the blenders can hold, then it would support ethanol’s price, and intuitively, we should expect to see sustained strength in at least corn demand. However, with more corn available than ever before thanks to the record U.S. harvest, ethanol will be variable to watch in the short term. While, yes, feed demand is strong, front-month soymeal contracts have a wide spread from deferred delivery, creating concern that premium will narrow as soybean crushers and processors are running at full tilt and rail problems get worked through. Historically, things match up to 1997-98 when a 70 million-tonne U.S. soybean harvest flooded the market and although demand was strong for the Oct-Dec period, it filtered off in subsequent months. Given that Informa’s predicting another year of record U.S. soybean acreage in 2015 (88.3 million acres) and South America being a much larger player than it was 17 years ago, it’s hard get bullish right now going into 2015 for the oilseeds. Certainly, there’s crop left to market from this year’s harvest but it’s worthwhile to take a deep breath and start a to-do list for the coming six-to-nine months.

To growth,

Brennan Turner


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 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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