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What does Brazil have to do with me?

Last week, Brazil's government was thrown into chaos by allegations of corruption against President Temer. There are plenty of stories with full details available, but it is worth reviewing.

Last year, former President Rousseff was ousted in a corruption charge by a man named Eduardo Cunha. But reports of a tape with the current president approving a payment to Cunha (now in prison) that has been submitted by JBS, the meatpacking giant. This would incriminate President Temer, though he is fighting the allegations and remains in office.

The impact of this news was felt immediately. Since Temer was put in office, the Brazilian economy has been strengthening on pension reform and some potential interest rate moves, along with a perceived return to a calmer political climate. But the tape resulted in a major drop in the Brazilian stock market, and (of more importance to those of you in the U.S. and Canadian commodity market) the real fell.

This lower currency value makes Brazilian agriculture products more attractive to importers (particularly for corn and soybeans, but other products as well). This could steal some demand from other exporting countries. On the flip side, outside buyers may choose to stay away from Brazil for a long-term partnership due to the uncertainty of their political climate.

Wheat

Wheat prices are leveling out with the market much more calm following the realization that the snows in May in Kansas probably did not do much long-term damage. The U.S. winter wheat crop ratings improved modestly in the last week after falling earlier in May on snowy conditions in Kansas.

The USDA rated the winter crop at 52 percent good/excellent compared to 51 percent a week ago, but this is still well below last year's amazing crop rated 62 percent good/excellent. Spring wheat planting in the U.S. is mostly done at 90 percent completion. The biggest thing to watch this year in wheat is the basis situation, as demand for higher-protein wheat is strong and driving up their value versus the board.

Durum

The durum market remains well supplied and near previous lows. North Dakota has planted 72 percent of the durum crop, which is ahead of the 64 percent average pace.

Canola

The canola market continues to struggle with the opposing forces of tight supplies versus large production of broader oilseeds. In Canada, supplies are very tight given last year's harvest problems, and demand has been strong. Both the U.S. and China are buying up a lot of canola, keeping old crop supplies very small. Even European supplies are tight.

While planted area is set to expand in 2017, rains have been an issue in several areas (though this is expected to improve in the next week). In North Dakota, planting is in the final weeks, with 72 percent done versus 63 percent for the five-year average.

On the flip side, the soybean and palm oil markets are working lower, and canola has trouble deviating too much from the direction of those oils. Huge supplies of soybeans in South America and the U.S. are tough to ignore. In the U.S., soybean planting efforts have been able to keep pace with normal, despite a cool and wet spring to date. The USDA reported 53 percent of the crop in the ground compared to 52 percent for the five-year average.

Peas & Lentils

Pulse shipments have lagged in April, with the Canadian Grains Commission (CGC) reporting 33.1 thousand metric tons of lentils loaded for export compared to 72.5 thousand metric tons in March.

Mustard

There really isn't much to report for mustard seed. Export movement remains slow, as the CGC reported just 200 metric tons of mustard seed cleared through reporting terminals.

Barley

The USDA showed that barley planting is nearly done and right on schedule despite some difficult planting weather: 88 percent of the crop is planted compared to 87 percent for the five-year average. And 59 percent of the barley crop has emerged, lagging the five-year average 64 percent.

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