MarketInsight Nov. 2, 2015

Marlene BoerschMarket Insight

Major grains & oilseeds markets – The futures markets were a little stronger by the end of the week (particularly CBOT wheat) – despite the lack of participation by the fund elements and also the strong dollar. US exports for the week were again quite good. The US harvest is nearly complete and should be finished by next week. Producers were reluctant sellers and it would seem “harvest pressure” to sell in the US markets is just about over. Weather continued benign in North America while concerns persist over dryness in the FSU and Brazil.

Cash trade was quite good in wheat to the Middle East. Eastern European/EU wheat continues to be the cheapest origin for nearby business. It looks like there will be a shortage of export barley this year as there are few offers and one cargo of Black Sea barley traded at a good premium to feed wheat and corn. The Chinese continued to buy soybeans as the margins remain good and they rebuild their hog production.

Funds were idle last week.

 

Soybeans – The Chinese continue to be good buyers and we expect more sales to be registered with the USDA this coming week. The current usage continues to tell us that the WASDE estimates for Chinese imports are too low.

Canola – Canola is becoming quite competitive with soybeans for the Chinese crusher. If we have a weaker “Loonie” or lower prices, then as a result we will soon have the Chinese back as buyers.

Flaxseed – The SAF yield estimate for SK flaxseed stayed at 23 bu/ acre in their last report of the season. This is 2 bu/acre higher than the 10-year average and higher than the StatsCan yield number for Saskatchewan of 20.5 bu/acre, or the StatsCan number for Western Canada at 21.1 bu/acre. We cannot see anything bullish in this market.

Wheat – We expect the disparity between US wheat futures and cash European wheat to continue while there is pressure to sell nearby Eastern European wheat. After wheat goes under cover, prices will firm.

Durum – In trade, Iran has apparently managed to swap 80k mt of their durum for a slightly larger amount of milling wheat per trade chatter, and set Oct 30 as the date to finish the remaining 120k mt of their durum available to swap. Algeria is working a durum tender though we’ve seen no results as of yet.

Feed Grains/ Barley – Cash prices are weak following reports of Brazilian corn trading to the US. We think this is a short-term situation and prices will move to reflect US prices moving forward. We see no reason for US producers to drop their price ideas. Barley prices are firm with few sellers. Canadian feed barley should be worth $200.00 USFMT FOB Vancouver.

 

Peas The weekly CGC stats show that YTD exports are 157k mt (16%) ahead of last years’ pace while production is ~17% lower than last year. This is part of the explanation for strengthening prices this fall. In overseas markets, it seems that the Gvmt of Maharashtra is taking off the Gvmt imposed limits to interior stocks for oilseeds and pulses.

Lentils – SAF finalized their yield estimates in their last report of the season and in the case of lentils, increased their estimate marginally by 14 lbs/ acre to 1,293 lbs/acre, slightly below the 10-year average of 1,312 lbs/acre. This increases the provincial production estimate slightly to 2.25 million mt, about 91k mt higher than the latest StatsCan estimate of 2.16 million mt. Demand remains excellent.

Faba Beans – Faba beans are in the peak of harvest throughout New South wales in Australia.

Canaryseed – The SAF yield for SK canaryseed was scaled back in their last report from 1,099 lbs/ acre to 1,017 lbs/ acre. This is still substantially higher than the StatsCan number of 813 lbs/ acre.