Seeding continues in Western Canada with all Canadian Prairie provinces well ahead of their-year averages, matching their counterparts across the border in northern U.S. states that are also ahead of schedule. That being said, freezing temperatures are in the forecast for a few areas and so the percentage complete could technically be lower than what officials are saying if guys are needing to reseed. Further, some violent storms and rains brought more rain than some fields needed. The colder temperatures though have many farmers from Alberta to Iowa checking their first-seeded/emerged crops to see if a re-seed is necessary. If more headlines emerge that re-seeding is a popular action, expect a rally by bulls waiting to get out of their short positions they've held onto for so long, and accordingly, an opportunity to make a sales on that won't likely prolonged by more than a few days.
It's tough for any bulls to run away with anything anyways as the most recent W.A.S.D.E. report from the U.S.D.A. showed grain supplies are set to rise again this year. Almost all production and ending stocks numbers came in above expectations, including the 2015/16 carryout of U.S. corn, soybeans, and wheat at 1.746 Billion bushels, 500 million bushels and 793 million bushels respectively. On a global level, more wheat is expected to be harvested by Australia and more soybeans and corn are again expected to come out of South America (do they have a production threshold?!?!). Basically, another "average" year will
Granted this is based on an average growing season for all producers in the 2015/16 marketing year, the near-term outlook shows a decent weather environment. That being said, meteorologist associations from Australia & Japan joined their American counterparts in saying that there's a strong chance of an El Nino making landfall sometime this fall. Some may wonder if this is another "cry wolf" scenario as similar calls were made last year but never materialized, but I'm not one to second-guess weather. Should we see the phenomenon, one should expect below-average rainfall this winter & next spring for most of Asia (there already is some challenging conditions in Australia), dryness on the Pacific side of South America (read: Argentina), good rains in the southern half of Brazil (they need it!), and likely some wetter, but cool weather in North America. This would help yields in many areas but this type of weather brings about questions of quality as well.
Overall, most commodities are holding above their technical lines of resistance on the charts thanks to one-off headlines like the aforementioned weather concerns, decent sustained international buying of corn and soybeans, and the Kansas crop tour showing fields that came in below expectations. However, this month's W.A.S.D.E. report is hard to ignore. Ultimately, there's more bears lurking around from a fundamental standpoint and add in the speed and efficiency of Plant 2015 because of good planting conditions, it doesn't look like any bulls will get out of the pen.
To growth,Brennan TurnerPresident, 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).