MarketInsight Dec.14, 2015

Marlene BoerschMarket Insight

Major grains & oilseeds markets – There is very little going on; it was a featureless week with futures closing a little weaker on Friday following a generally positive week. It will remain like this until the New Year.

The WASDE report contained no surprises to the market; it made little change in the world numbers. To the market, the WASDE report was a non-event.

Cash trade was limited except for some wheat trade to Algeria, and a little corn and sorghum.

Funds were quite active in covering some of their shorts in futures.

Soybeans – WASDE: The domestic US soybean numbers were unchanged from the November estimate. In our view, the USDA continues to underestimate the demand for US soybeans but we will not see a significant change until the March WASDE report.

Trade was very slow as is to be expected at this time of the year. The USDA did report some beans sold to China, but we do not expect to see much additional volume reported until the New Year. Total Chinese imports continue at a cracking pace and we expect annual imports will exceed 84 myn tonnes.

Canola – Growers delivered a thumping 396,000 tonnes in week 18, we exported 224,000 tonnes, and domestic usage was 165,000 tonnes. The visible increased slightly to 1.53 myn tonnes. Still, canola continues to be very well priced for export to China compared to soybeans and we do not exclude that more business was done last week.

Flaxseed – The October StatsCan export numbers for flaxseed confirm that exports are significantly behind last years’ pace. To the end of October, only 44k mt have been exported, while last YTD 74k mt had been shipped. This is a 40% drop in exports YTD.

Wheat – US weekly export sales were again low, down 15% on last year. Algeria reportedly bought 5-800,000 tonnes optional-origin for Feb/Mch at $195-$197 C&F. Cash trade will remain very slow until we get in to the first two weeks of January. Futures appear to remain oversold; there could be a rally based on short-covering.

Durum – FranceAgriMer (French Farm Ministry) pegged their 2016 durum area 11.6% above 2015 at 874.38k ha – up following a decline over the past few years; they recently put condition at 97% gd/ex. Algeria reported that their average import prices of wheat during the first nine months of 2015 declined to $247.00 per mt versus $301.00 per mt during the same 2014 period; their durum import cost though during the period averaged $456.00 per mt versus 392.00 last year at this time.

Feed Grains – Small trade of corn to Mexico, and sorghum to China. French barley sale to China at $185 ISF per mt FOB. The corn market resembles wheat: US funds are short, but non-US cash markets say there is no shortage.

Peas Though there were no big surprises in the pea market this week; prices remain quite firm. It was interesting to see that grower deliveries dropped again to only 29k mt in spite of the spike in prices last week. Perhaps pea growers are taking their cue from lentil producers and are now expecting significant weekly increases. If that becomes a reality is mainly in the hands of Indian buyers and the weather gods in the southern hemisphere.

Lentils – We are seeing extraordinarily good forward values and should be booked. Prices could go up more, but if a lot of additional acres are seeded in Canada, the US, Australia, Turkey, India (next year) and if conditions improve on the Indian Subcontinent, they could also drop (-a lot-). So do consider both the upward and downward risks in your decisions.

Canaryseed – Even with the ‘new’ production numbers from StatsCan, canaryseed production is lower than historic demand for the crop, though total available supplies are tightly aligned with annual usage. In the end, demand may need to be rationed across the available supply at some point during the marketing year. – The remaining wild card is the level of existing on-farm stocks.

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