ISSUE 121, April 19, 2024

AGRONOMY UPDATE

Madison Fritz, Merchant

Spring seeding is coming into full swing and the Montana seed and agronomy team has some exciting projects underway. Thanks to Chet, Heather, and the team in Tiber, seed has been flying out the door to our growers. We are most excited about getting our pea variety demos in the ground. We have selected three excellent growers across the state to trial different varieties of green peas from Progene. The varieties include Ginny 2, Passion, Banner, and Banner Ultra. We hope this project will showcase the different agronomic traits of each variety on a large scale and provide good data and insight to our pulse growers.

We are also collaborating with a company out of Davis, CA called NuCicer. They breed lines of unique colors and shapes of chickpeas that can have protein content as high as 30% (normal protein content typically ranges from 18-22%). Some growers have already gotten a good start planting and we are excited to see how they will perform throughout the growing season. I will be making rounds this summer monitoring crop status and making sure they will be high quality chickpeas.

Lastly, we are excited to have some certified green pea seed production acres going in this spring. We are doing some Ginny 2 increases as well as a new, superior green pea variety called Passion. Certified seed is an important tool for CGI to have. Not only can we provide our growers with high-quality, locally grown seed but provide the end customer with a superior product. 

INTERNATIONAL

Wiley Wang, Merchant

The past two weeks have been very interesting. Even without significant volume spikes, we began to see several trends happening right now: 



1. Some end users in SE Asia begin to look for and, in some cases, trying to lock in new crop prices for winter wheat. These are all done without any interior liquidations. Flat prices for winter wheats have been weakening so good time for end users to take advantage of it. But worth mention that majority of the end users are waiting since they all see the winter crop conditions are pretty good. 
2. Transition and confusion of Latin American corn season. In theory we should’ve begun to see most of the demands go to Argentina corn for June and onward, but there are still interests for PNW corn even though our prices are higher. How many actual businesses realized ex PNW then? Could be very little. Once Argentina farmers begin to sort out the priorities, most of the optional origin sales would probably come out of South Americas. 
3. Canadian trade begins to offer super competitive No. 1 CWRS hi-pro prices. It is common for them to cut prices on new crop No. 2 CWRS 13.0 or 13.5 but still so many risks with the unknown growing season and seeding haven’t even started. 
4. Oilseeds complex went back to depressed in China. There had been a quarter or so recovering on feed materials prices but now all back to negative territories. 

WHITE WHEAT

Steve Yorke, Merchant

Another couple of weeks of sideways movement for white wheat. Currently we are at 5.75/BU after reaching the 5.90 level earlier last week. Each time it looks like we may get back to $6.00 the board breaks or there is just enough grower selling to push bids back down. Routine business has been steady, but we are starting to see buyers move into the July-September time frame which will keep old crop prices stagnant. The only hope for anymore old crop demand will have to come from the Government in the form of CCC donation wheat to Yemen which is highly unlikely at this time. The exporter is still short June/FH July due to slow grower selling but once spring work is completed, we should see another round of selling which should cover most old crop sales that are on the books.

It’s time to be creative marketing old and new crop. Look for futures rallies and have your orders in so opportunities are not missed. The Cash+ contract could work nicely for getting a little premium upfront and if the call option is exercised in August then it can be used as a new crop HTA. Call into your local office for more information on this tool and the other tools available with our Columbia Producer Solutions program.

Ryan Statz, Merchant

DURUM

Very initial seeding for durum is upon us and will really be picking up over the course of the next two weeks. With this, grower movement and selling of any kind has been extremely slow. On the other side of the coin, commercial shippers are staring at a healthy projected world supply and demand picture that will likely feature another year of participation from Turkey. ‘24/25 prospects from Turkey look promising as acreage was up 10-15% and conditions have been favorable – thus the world could possibly see increased Turkish competition than seen in the ‘23/24 campaign where big supply shocks from non-traditional exporters (Turkey) shocked all participants in negative price fashion. Because of the world S&D situation, business will likely continue to be sold to keep market shares in line and the timing of this business will dictate market structure. If up front and bushels are needed to fill, prices will stay supported until more grower participation picks up. If deferred, prices will stay relaxed as additional new crop supply from around the world will keep pressure on overall market structures. Yes, it is still early, but keep in mind that most of the world will see harvest occur before North America and no one is wanting to be left holding the bag.

BARLEY

Initial barley seeding is upon us and will likely continue to pick up over the next few weeks. As such, interior markets are very quiet and will likely serve as a nice break to maltsters who have been hit with increased deliveries and general over saturation the last few months. The market knows acreage would be down, but the magnitude was unknown until the USDA published its first look at state-by-state acreage forecasts at the end of March. As stated previously, total US acreage was shown down 17% y-o-y with Montana down 20% y-o-y. These numbers will continue to be debated but the numbers are what the market will trade until we get more information. As such, the market is indicating that we have more than enough bushels on our hands and attention will turn to quality and varietal intake. Please keep in touch with your local CGI representative about preferred varieties to avoid being stuck with something the market doesn’t want and won’t take as malt… the backstop will be feed and that will trade at a discount. Happy Seeding! 

Joe Foley, Merchant



SOYBEANS

Soybean prices are grinding lower, retracing nearly all of the March rally. There hasn’t been any notable change to the fundamental outlook of big S. America crops, amid the seasonal decline of interest in U.S. origin exports. The April wasde report came and went without much fanfare, although the USDA did increase the U.S. carryout by 25 million bushels, mostly the result of a downward revision to exports. Brazil harvest is in its final stages, but the farmers down there, akin to their U.S. counterparts, are selling only grudgingly. Accordingly Brazilian cash premiums have rallied, although May through July Asian demand still comfortably pencils out of Brazil. The USDA maintained their 155mmt estimate of their crop, although local observers are in the 146-151mmt range. Argentina has just begun their harvest and most estimates still suggest a 50mmt crop, which is double the size of their drought stricken crop a year ago. U.S. weather will begin taking center stage for price direction, but would expect lower prices ahead barring any unforeseen demand switch or unfavorable weather for the U.S.

CORN

Corn prices have been rangebound in a mostly quiet overall environment. Argentina harvest has begun, approaching the 25pct completion mark. While the USDA actually reduced their Argentina production estimate by 1mmt to 55mmt, the market is bracing for a bumber crop which will furnish ample competition for U.S. exports late July and beyond. Indeed, U.S. export sales have begun their seasonal decline; today’s export sales report showed 501,000mt, which is down substantially from the 1.3-1.4mmt recently reported. U.S. planting is just scratching the surface now, with hopefully suitable planting weather ahead. ND observers are skeptical of the USDA’s downward estimate of corn acres vs. last year. Recall the March planting intentions suggested 250,000 fewer corn acres in ND than a year ago, but weather permitting we expect closer to unchanged acreage of just over 4 million acres. Future price direction is all about weather now: planting conditions in the U.S. and Safrinha corn production in Brazil. Normal weather should lead to lower prices with ample to burdensome carryover stocks worldwide.

In the last few editions of the Columbia Grain Newsletter, we focused on amending Hedge-to-Arrive contracts and Basis Contracts in “Normal Carry” markets along with amending Hedge-to-Arrive contracts and Basis contracts in “Inverted” markets. One of the many benefits of these specific contracts is their flexibility to take advantage of the current market conditions. When we amend a contract, we must remember that it must be mutually agreeable to do so. But when the market conditions warrant, we should be taking advantage of the opportunities. 

Reading the “tea leaves” of the market and looking at these opportunities and amending contracts under the right circumstances helps to add to your overall grain sales and bottom line. The price action that we have seen over the last 6 to 8 months is a great example of the importance of doing everything we can to add value to your grain sales and your bottom line. 

Inputs costs are down slightly year over year, but the grain markets in general have come down at a significantly faster pace than input costs. This is making it even more important to be taking advantage of opportunities as they arise and having a plan in place to help take advantage of the opportunities as they develop. 

Looking at the supply and demand numbers from the USDA it is difficult to build a case that we will see the markets snap back and trade higher in a sustaining fashion. There will be a lot of weather and production factors that will impact the market going into the planting season. This coupled with some rather large short speculative positions in the market we could see a short-lived move higher in the markets. But we need to be selling into the markets as they give us these opportunities this year. 

Using marketing tools like the Accumulator contracts or our new “CASH +” Contract are a great way to add a premium to your grain sales and given what we have seen over the last few months any premium that we can add to our grain sales will be well worth it. 

Be sure to reach out to your local buyer, merchandiser and managers to go over all the different tools that we can offer and tailor to your operation. 

Sean Ferguson, Merchant



CANOLA

The canola market has fallen into a downward slide the past few weeks off the heels of a stronger USD and weaker oil markets. Crude oil values have fallen to mid-March values, and subsequently, the market price for biomass-based biodiesel continues to fall making it less attractive for crushers to crush oil for the biofuel market. Basis values have weakened both in the US and Canada as crush margin has thinned and crushers have gained much needed coverage in the nearby. Nothing new has changed in the export situation, although ICE canola is becoming more competitive vs Matif rapeseed as reports show certain portions of the EU rapeseed crop experiencing unfavorable growing conditions due to uncharacteristically cold weather. 

The CAD/USD has been sharply weaker the past few weeks following weaker crude values and a stronger USD which has been pushed by more hawkish-than-expected sentiment coming from FED Chairman Jerome Powell.

FLAX

Flax values have firmed slightly as of recent, although overall demand remains sparse. Exports continue to lack, and domestic demand remains nonexistent, which puts a ceiling on where values can go. There have been reports of Chinese buyers coming to the table to Canadian product, which could be an indication of product pipelines drying up out of the Black Sea. The EU proposed a tariff on Russian exports to Europe for oilseeds/cereals, which could have a material effect on the market if enacted. Kazakhstan had a subpar last years’ crop, so we could see global carryout tighter compared to years’ past.

HARD RED WINTER WHEAT

Justin Beach, Merchant

The market continues to focus on crop conditions and lack of demand. HRW basis has deteriorated considerably in all major gateways. We’ve seen a lot of trade for new crop at the Gulf, California is weaker, and Chicago/Kansas City gateways are weaker as well. Also, we have seen protein premiums in the domestic market dissipate. Most buyers for HRW are buying June/July and focus will be on new crop shortly with buyers seeing large on-farms stocks and a fresh crop on the horizon. Crop conditions have deteriorated however the US is set up quite nicely for an increase in HRW production. Also, a rallying in the dollar has made us more uncompetitive in export markets. This market needs a savior, but cheaper offshore options continue to dominate the global trade. If that savior was going to be China, it is feeling less likely today as Biden calls for a tripling of tariffs on Chinese steel as he makes economic pitch in Pittsburgh. We continue to be of the opinion that this market warrants selling rallies. Please reach out to your local CGI representative to discuss contracting option including Columbia Producer Solutions. 

BULLISH

• Deteriorating Crop Condition 
• Russian Values have firmed nominally 

BEARISH 

• Dollar Index 
• Global Values 
• Impending New Crop 
• Low Demand 

HARD RED SPRING WHEAT

Rudy Weitze, Merchant

Front month Minneapolis futures continue to tread water as bullish news is lacking. For the month of April, May futures have fallen just a nickel and shown a range of 37 cents. Managed money positions remain a focus for futures as they continue to hold their short position of 27,000 contracts. For reference, that’s roughly 30% of last year’s total spring wheat crop. If they finally decide to start covering their short, it could provide some support for futures, however nothing on the horizon makes me believe they will do this. 

Domestic cash markets are so quiet in HRS that you could hear a pin drop. Growers are in the field and are focused on planting. Great seeding progress has been made in the PNW with Washington at 42% and Idaho at 39%. The northern plains are just getting going with Montana at 2%, North Dakota at 3% and Minnesota at 3%. Eastern North Dakota has gotten some timely rains, but more will be necessary to ensure a solid crop. With farmers preoccupied and futures stagnant, we’ve seen farmer selling slow down. Millers are fat and happy on the front end and have no desire to own more wheat today. They have some interest in new crop, but with the lack of farmer selling commercials aren’t that interested in extending themselves out.

Exporters continue to hold bids steady firm and we are seeing inverted bid structures from them. We still find ourselves a premium to Canadian values FOB Vancouver, but the gap has continued to narrow. There are bits and pieces of old crop demand remaining and we are starting to see new crop interest from global buyers, but volumes remain relatively slim. The key to firmer cash price levels will be crop conditions and pressure from the Canadian farmer but exporters continue to lay into new cash sales. However, the reality is the USDA is forecasting an increased carryout. Before you enter the field, I’d urge you to take advantage of these seasonally high basis levels. With the amount of wheat left in the bin, basis is liable to tank as we enter June. Have a happy and safe planting season.