If there are any outliers in the rather bearish grain complex right now, Brennan Turner, founder of FarmLead and the Combyne marketplace, says wheat and maybe even soybeans deserve the title.
Even though the latest WASDE says we’re set for record global ending stocks for the yea, the COVID-19 pandemic has meant a boost in demand for “food simplicity” and a return to staples, including wheat. Any supply disruption, ie. like we’ve seen in Ukraine, means there is an opportunity for some upset, Turner says.
In this RealAg Radio video interview, Turner says that that little bit of positivity means that farmers should set some price targets, for sure. We’re not going to see 2008 prices, but we may see some blips, of five, 10, or 10+ per cent price increases, so make some sales, and sell those increments. There’s something to be said for capturing some profits, so don’t drag your feet on price improvements, he says.
Remember: there’s plenty of wheat out there and will be more coming online in the coming months. And that puts pressure on supply.
Soybeans also deserve a tip of the hat, as reports of 2021 orders from China are an encouraging sign on the demand side. The story for 2020 is going to be a function of one player — China. Soybeans are always about Brazil, the U.S., and China attention and right now, currency is playing a role in the buying dynamic. Brazil’s real is high, the U.S. dollar low, making U.S. soybeans a bit more attractive. And there’s the Phase One trade agreement commitments, too, remember. China is trying to rebuild its hog industry, Turner says, and Brazil is nearly out of beans. There could be some weather premiums in the mix, too, so watch for those.
All that said, sales inform the future implied price, but actual shipments show us real demand numbers.
Does the loftiness potential in soys help out canola? November futures broke through some resistance lately, which was good to see, but so much still hinges on China, just like soybeans. There are some positive demand signals on the entire veg oil complex. The EU is buying more Canadian canola too, for biodiesel, which has softened the blow of China buying less.
But if you’re going to sell old crop canola, do it by early July, he says.
Finally, Turner says that corn is the sad trombone of the group, as there just aren’t a lot of positives on the demand side. Or supply, really. Will prices dip below $3? The ethanol market has rebounded a little bit, but is still 75% of what it was a year ago, and that weighs on the crop. There’s lots of buzz that 94 to95 million acres went in, not 97+, so if demand inches forward and supply creeps down, the crop could get some support. But we may see pull back between now and September (as is seasonal) and could dip into the 2s. Turner says he’s not as bearish as six weeks ago, but he’s hardly bullish corn prices.
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