Acreage, stock reports spark a rally — this week in the grain markets


Grain prices were able to find some buyers on Friday, June 29th, to end the trading month and wrap the quarter. Except for canola and soybeans, the grain markets ended up in the green, led by the wheat complex. While today’s StatsCan and USDA reports were certainly important, they weren’t the only things moving grain market this past week.

Specifically, the EPA announced a biofuel target for 2019 of 19.9 billion gallons, up 3.1% year-over-year. The increase is mainly attributed to more advance biofuels, with conventional renewable fuels, such as corn-based ethanol, earning the same number that they did in 2018: 15 billion gallons. The announcement was slightly delayed as the debate raged on over the potential change for refiners to blend biofuels into gasoline and diesel.

While the U.S. winter wheat harvest is certainly accelerating (now 8 points above the five-year average), but quality continues to be a concern. This is especially true in central and western Kansas where rains are stalling combines in the field. The precipitation is a double-edged sword as it likely will deteriorate the quality of a winter wheat ready to come off, but it will certainly help charge desperately-depleted soil moisture conditions in the area.

The Northern Plains are getting some good rains and crops continue to prosper. However, head across the 49th parallel into Western Canada and you start to see drier conditions. More specifically, we’ve started to see the good-to-excellent ratings for durum, peas, lentils, and chickpeas in the Prairies start to decline.

Drier conditions in northern Europe has led the European Commission to recently downgrade its wheat production estimate by 2.65 million tonnes to 137.6 million tonnes. Similarly, SovEcon just downgraded its estimate for the Russian wheat crop again, this time by 600,000 tonnes to 72.5 million.

Also downgraded their estimates this week was the USDA attaché in Beijing. They said that the People’s Republic will only import 100.5 million tonnes of soybeans this year, not the official USDA estimate of 103 million tonnes. While it’s certainly expected that China will import less soybeans from the US, it’s widely expected that trade lanes will change in other ways. More specifically, US soybeans will start to head towards Europe instead.

On that note, there’s still a lot of soybeans in the U.S. pipeline. The USDA said that, as of June 1st, 2018, there were still 1.22 billion bushels of the oilseed available. That’s a whopping 26% increase year-over-year and up 40% in the past 2 years! It did technically meet pre-report expectations, though.

USDA stocks, June 2018

A similar theme, albeit not as bad, was seen in U.S. corn stocks, which for the June quarter, are up 12.5% in the past two years. US corn acres were the biggest surprise of the day, as they handily beat pre-report expectations, coming in at more than 89.1 million acres.

In Canada, Statistics Canada had some surprises (see below). Namely, canola acres were raised from their March number by 1.36 million acres to 22.74 million. This would put it slightly below last year’s record of 23 million acres. It was widely suggested though that the market has already priced this in. Where those acres were pulled out of seems to be in flax, peas, lentils, and wheat.

While Friday, June 29th was certainly a busy day for grain markets, we need to continue to remember to take these numbers in stride. They are one moment in a large, elaborate system that are the grain markets. Nonetheless, they’re important to reflect on for a few days and digest them before moving on.

StatsCan acreage estimates, June 2018

That being said, FarmLead recently was named to our own report that we’re taking in stride. Specifically, for the second year in a row, FarmLead has been named to Forbes’ list of Top 25 Most Innovative AgTech Companies. Our team will dwell on these numbers for a few days during the holiday weekend. It’s a great feather in the cap and an continued indication of how we’re making cash grain trade easier, but also more effective.

Have a great long weekend, Happy Canada, and Happy Independence Day!

Categories: Grain Markets / Markets

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