Major grains & oilseeds markets
This was a short holiday week, with many countries still closed on Easter Monday.
All grains closed higher for the week. U.S. grains got support from the weaker US$, commodity fund short covering, some commercial buying, and weather concerns regarding late planting. A general lack of farmer selling everywhere helped as well.
Soybeans closed higher for the second day Thursday to post their first weekly gain in six weeks on more short covering and some help from higher soybean meal. Corn finished the short week with modest gains, which was enough for the lead May contract to its highest settlement in a month. Rain in the Midwest through the weekend may have fueled more concerns about planting delays.
Wheat markets were mixed with winter wheat pressured lower by forecasts for more rain in the Plains this weekend.
- The USDA report last week was a bearish report due to the stock numbers.
- All the production increases were in South America.
- We may still see bigger numbers yet in May and June.
- The market needs to buy demand or we need a major weather problem in the US to change course or add value into the markets.
- The long term big picture has not changed: World stocks are up 10 Mmt on the year because a 33 Mmt increase in production far outweighs an 18 Mmt increase in demand, and US bean acres could explode this spring.
- Without a weather problem, world bean production will continue to increase with China likely unable to absorb all of it.
- The USDA made few changes to the world rapeseed S&D, and stocks remain at 5-year lows.
- Matif old crop rapeseed ended lower, but ongoing dryness across Western Europe lifted new crop to a 4-week high close.
- Total usage in Canada for week 36 was an excellent again at 404k mt.
- In international markets, record world wheat stocks as outlined in the USDA-WASDE report last week afford the world a significant supply cushion. In addition, a massive corn crop will buy feed demand from wheat (although corn currently is more expensive than wheat), and India’s 6 million mt of imports this year could well be missing from the import markets next year.
- At the same time, farmers in the supply countries have sold little recently, much of Europe and the Black Sea is dry and the Vegetation Index is a concern with no rain in the forecast. And the Fund short looks vulnerable to weather problems.
- Durum exports during week 36 amounted to 105k mt; 2.9 million mt year-to-date. This is 13% or 443k mt lower than last year-to-date.
- USDA left world barley production unchanged at 147 Mmt against 148.1 Mmt last year, but lowered consumption 250kt to 147.1 Mmt (147.8 Mmt last year) and raised end stocks 500kt to 24.2 Mmt (24.4 Mmt).
- Canadian barley remains uncompetitive in export markets and remains a domestic affair.
- Old crop product must be sold now, as pricing will start drifting towards new crop values over the next while.
- New crop sales to date took a step up with the recent activity and should ensure decent shipping volumes for peas for the first couple of shipping months following harvest of the 2017 crop.
- With the still significant differences in current crop – new crop prices for lentils, growers must make sure not to carry any grading lentils into new crop positions, or the price advantage will be lost.
- For new crop, we show a fairly balanced picture of a 3 million mt production against a 3 million mt total usage, leaving us with a similar ending stocks as this year.
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