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Game speed picking up

With an early spring, we’re hitting that time of the month where field activity is picking up steam.

The most recent U.S.D.A. Crop Progress shows that the seeding pace in the U.S. is ahead of pace on the cereals but a little behind on corn because of cooler/wet weather. In the southeast, the seeding pace has picked up but farmers are now looking at planting other crops on fields that they haven’t got corn into yet as window to make sure it has a full growing season opportunity is closing. On that note, more analysts are starting to agree that whatever corn acres are lost in the Delta will be made up for eventually in the Midwest. However, soybean prices have held up with decent crush numbers and above-average export numbers. Accordingly, just like N.H.L. players have to step their game up for the playoffs, the relatively strong domestic soybean demand may swing some American acres over to the oilseed..

On that note, the first legitimate estimates are starting to come in more regularly now as analysts and companies have more data to go off of to improve their prediction models. The U.S.D.A.’s European attaché says that the E.U. will take off 151 million tonnes of wheat this year, down 5.4 million tonnes or 3.5 per cent from last year’s record crop, but that number would actually be number two in terms of the largest harvests on file. The forecast is amongst the highest out there but growing conditions are relatively favourable across Europe albeit some insect issues that are emerging. In the Land Down Undaa, the U.S.D.A.’s Aussie attaché says 24 million tonnes of wheat will be taken off in 2015/16, thanks to 34.35 million acres and average yields of 25.3 bushels/acre. This is lower though than the most recent forecasts from A.B.A.R.E.S. (the Aussie version of the U.S.D.A.) who says 24.5 million tonnes will be harvested this year, with 26.2 bu/ac yields. The more important debate though in my opinion will be exports, with A.B.A.R.E.S. estimating almost 18 million tonnes while the U.S.D.A.’s Canberra office says it’ll be only 17 million tonnes.

Coming back home, the U.S.D.A.’s Ottawa office says that canola production will be 15.55 million tonnes off only 20.33 million acres, as current prices aren’t buying any additional acres. On that note, this time of year can be fairly bearish on the futures markets as crops get planted, but between currency, basis, deferred delivery, etc., what’s happening on the futures board doesn’t necessarily translate well to the cash markets. (i.e. cash corn prices in Western Canada right now). Further, a futures board comparison is only available for a handful of crops. Not to say using futures & options doesn’t have a benefit of protecting and/or adding to the bottom line, it has become extremely speculative though & there are a lot of big fish swimming in the same bowl as the individual producer. Another big fish just got added to the bowl as a Saudi Arabian ag investment arm and Bunge joined forces to buy 50.1 per cent of the Canadian Wheat Board. Ultimately, there are still some unanswered questions out there but the underlying fact is that this move does bring even more experience to the C.W.B., thereby increasing its competitive position in not only Canadian agriculture (with potentially more investment/expansion soon), but the global game as well.

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).