Late Planting Sparks Key Market Reversal
AgWeek – 05/19/2019 Technical indicators are showing a possible bottom in the wheat complex. It doesn’t happen very often in grains where we have a spike bottom (May 13 price action with a new low followed by a higher close). But these markets have been counterseasonal so far (lows in the spring during planting) so the bottom could be in. Generally, grain markets languish at lows for months at a time.
The markets have been anything but typical this season. I always await the threat of a spring freeze to spark the wheat markets for 30 cent gains in the spring. But with everything running counterseasonal, maybe it will be the threat of warmer and wetter conditions during heading and a crop behind average in maturity that gives the wheat a boost in the spring of 2019. Soft red ratings continue to be lower than average compared to hard red ratings. This has led to a widening of the Kansas City to Chicago spread to -50.25 cents. Typically, the Kansas City market is +10 cents to Chicago. It’s been interesting watching this spread widen from the -20 to -35 area for much of the winter.
US, Canada, Mexico Reach Deal on Metals, Clearing USMCA Obstacle Agri-Pulse– 05/17/2019 The U.S. has agreed to lift its steel and aluminum tariffs on Canada and Mexico, removing major obstacles for ratification of the renegotiated North American free trade pact by all three countries. President Donald Trump announced the news in a speech Friday in Washington. He said he was “pleased to announce that we’ve just reached an agreement with Canada and Mexico,” remarks that confirmed media reports of a deal to lift Section 232 tariffs on imported steel and aluminum. The duties were seen as a major hindrance to the congressional consideration of the U.S.-Mexico-Canada trade deal, which many U.S. farm groups say is their top legislative priority of 2019. The USMCA contains provisions to boost U.S. dairy and poultry to Canada as well as establishes updated sanitary and phytosanitary controls, but the primary benefit for U.S. farmers and ranchers is that it would maintain virtually zero tariffs between the three countries that were established in the current pact. “This agreement represents a key step toward approval and ratification of the U.S-Mexico-Canada Agreement, which will greatly benefit American farmers, ranchers, and agribusiness,” said John Bode, President and CEO of the Corn Refiners Association. “We commend the efforts of President Trump toward overcoming this roadblock in negotiations, and strongly urge Congress to swiftly ratify the USMCA trade agreement.”
A Wheat Revolution is Growing in Western Washington
K5 News- 05/16/2019 Eastern Washington is known as the state’s grain growing region, but a small group of farmers along with a couple of commodity wheat defectors are now growing a wheat revolution on the west side of the Cascades. There are about 50 million acres of commodity wheat grown in the U.S. and roughly 2.2 million of those acres are in eastern Washington. “Here in western Washington, we’re outside the commodity system so we can define what that wheat would be like, what it tastes like, what it looks like, what the nutritional value and functionality is,” The Bread Lab Director Stephen Jones explained. “We can develop wheat that tastes good but is also highly nutritious. So that’s different than what a commodity wheat is designed for.” Commodity wheat in eastern Washington is grown for white flour that is mostly shipped overseas. The total wheat production in 2018 was 153.2 million bushels. Washington is the fourth wheat producing state in the nation. Wheat ranks third in Washington commodities based on production value, representing nearly $691 million. Jones and his colleague Senior Scientific Assistant Steve Lyon left the commodity market in eastern Washington a decade ago to bring a different kind of wheat to the west side of the state. “When we got here 10 years ago, we were told you can’t grow bread wheat here,” Jones said. The Washington State University Bread Lab Plant Breeding Program conducts research on thousands of types of wheat, barley, buckwheat, and other small grains. They look for grains that grow well for farmers and are well suited for craft baking, cooking, malting, brewing, and distilling.
Durum Planting Progressing After Slow Start
AgUpdate – 05/17/2019 Cool, wet weather slowed the start to planting this spring, but durum producers have been able to make up some ground in mid-May. Unfortunately, the same can’t be said for prices which have remained stagnant. “The good news is that producers are making some planting progress,” said Erica Olson, marketing specialist with the North Dakota Wheat Commission. “The bad news is that prices are still pretty lackluster. Old crop cash bids are still around $4.50 up to $4.65 and new crop bids are around $4.75 with some closer to $5. Obviously there’s nothing overly attractive about those prices. “Looking back at price trends, cash prices have pretty much been stagnant since last October,” she continued. “These are price levels that we haven’t seen since 2010.”But back to the more positive news. Olson noted that the weather has been improving since the first week in May with warmer and drier conditions. That has allowed for better field work progress as well as planting.
Snake River Dams Critical to Wheat Growers
Tri-City Herald– 05/19/2019 In agriculture, everything is cyclical. The same seems to be true of the lower Snake River dams. Every few years, advocates of breaching the dams start speaking out on why they should be torn down, and the communities and industries that depend on those dams answer back with facts to prove why the region needs them. This time around, however, the stakes have been raised, thanks to breaching advocates tenuously linking the dams to survival of the Southern Resident Killer Whales (orcas) and the $750,000 Washington Gov. Jay Inslee proposed and the Legislature funded to study the impacts of breaching the dams. Stakeholders in the Pacific Northwest already have spent millions of dollars on salmon recovery… The Columbia-Snake River System is the top wheat export gateway in the U.S., and the third largest grain export gateway in the world. Farmers as far away as the Midwest use the system to access international markets. More than half of the wheat barged on the system passes through at least one of the lower Snake River dams, and it would take at least 137,000 semi-trucks or 23,900 railcars to transport that wheat by rail and road.