Know thy reputation

Coming off the long weekend in North America, the grains market started the month of September

Ag Market Update

Coming off the long weekend in North America, the grains market started the month of September trying to hold onto the green as geopolitical risk from Russia/Ukraine is somewhat fleeting but there is some increasing concern about the effect these rains have been having on the crops still standing and the general pace of Harvest 2014. In one of the boldest calls-to-action against Russia yet, the UK is looking to block Russian access to the SWIFT banking system. The system is a main connector of the Russian financial system to the rest of the world and a move that would certainly limit trade flows (i.e. getting paid for grain exports!). Russia has recently decreased its use of one of the world’s most prominent P.R. firms, Ketchum. With the Sochi Winter Olympics now out of the way, former U.S. Ambassador to Russia Michael McFaul, says Russia doesn’t care about its reputation as much as it used to (that’s a red flag in my book).

Interestingly, Chinese soybean auction sales increased measurably compared to the last eight weeks as almost 40 per cent of the offered bid was bought last week. This suggests that, if there’s interest in the more-expensive domestic supply, even more soybeans than expected may get imported by the People’s Republic. On the wheat import side of things, the U.S.D.A.’s attaché in Algeria is suggesting that the North African country will import a record 7.5 million tonnes, cementing its spot as the number two world importer after Egypt. Further, with the quality of wheat down this year from France, Algeria’s usual trading partner, other major exporters like Canada, Germany, & U.S.A. may be the big winners. Germany’s farm ministry has admitted that their harvest will be almost 12 per cent bigger than last year (almost 30 million tonnes coming off, second in the E.U. after France), but late/ harvest rains have left some crops not worth harvesting! First samples coming in have shown average protein levels at 12 per cent, well below last year’s 12.7 per cent level. Across the Channel, harvest rains in the UK are slowing things down but quality is above average so far and like their fellow European countries, it’s looking really big.

Adding to this is that Algeria historically hasn’t reached out to the Black Sea for supplies. Further, Canada has a fair amount of wheat ready to go still, according to a recent Reuters survey of analyst. Coming off the heels of the StatsCan Production report last week, it’s expected that the Canadian grain stocks report out this Friday, September 5th will show Canadian wheat stocks rising to a 20-year high of 10.7 million tonnes (as of July 31st, 2014). Similarly, canola inventories are seen growing to three million tonnes, five times greater than 2013’s carryout (to be fair, 2013’s canola stocks were the lowest since 1998).  Rounding out the estimates are oat reaching a five-year high of 1.2 million tonnes, while barley and durum inventories are also seen rising year-over-year (anyone surprised?). We here at have gained a bit of a reputation for being one of the earliest to make the “Cash Is King” call (did so in for the first time in mid-January) and it’s our opinion that this outlook will continue into at least Harvest 2015. Accordingly, make sales when you can, not when you have to!

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 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 ( or phone (1-855-332-7653).