MarketInsight Nov. 23, 2015

Marlene BoerschMarket Insight

Major grains & oilseeds markets – The markets ended the week a little higher, but the early start of the coming week does not look too promising due a very strong US dollar.

Last week, the strong USD, Fund selling, and weather issues (India planting, conditions Western Australia), and weak outside markets dominated the input into the markets.

Cash trade was again limited to wheat into the Middle East. Overall US export sales were not too bad, particularly wheat which exceeded trade expectations.

 

Soybeans – Funds were active sellers, which together with reports of more soybeans to be planted in Argentina after the elections pressured futures markets.

The US has changed the bio-diesel import rules; this could take the soybean carryover down 60 myn bushels.

Canola – Producers delivered 276,000 tonnes in week 15, domestic use was 131,000 tonnes, and exports were 217,000 tonnes. Visible supplies were 1.4 myn tonnes, with most of this in the primary elevators. For the time being, elevator companies will feel quite comfortable with these stocks levels and have no need to narrow their basis levels. We will not see any reduction of basis until the New Year.

However, note that usage remains ahead of last year, and at current prices we think exports can expand.

Flaxseed – Nothing new regarding the stats for flax since last week. We expect roughly unchanged export sales from last year while AAFC expects at 100k mt increase. We cannot see that happen with crop increases in the USA, Russia and Kazakhstan.

Wheat – Tunisia bought 125,000 tonnes of Jan-Feb shipment at $204 C&F plus 92,000 tonnes of Mar-Apr durum at $299 C&F. Israel bought Jan-Feb feed wheat at $193.50 C&F, Jordan again got no offers at its tender. Despite their recent purchase of almost 1-myn tonnes, Ethiopia could return to buy more in the near future due to “extreme food shortages”. US weekly export sales were down 15% on last year.

Durum – Tunisia tendered for 92k mt optional-origin durum and bought it at prices ranging $296.97/ $299.50 per mt C&F, for Feb/Apr. In the news, Strategie Grains increased its 16/17 EU durum wheat area estimate by 200k ha on the month to 2.7 myn ha.

Feed Grains – Not much activity here. Producers continue strong holders and short are getting nervous. Cash premiums are stronger in the US and South America.

 

Peas Further exacerbating the problems in India is unusually hot weather in important pulse production areas and the prospect that the next rabi crop (which is being seeded now) is endangered because of low moisture reserves.

Having said this, export shipments of Canadian peas have slowed while India is taking delivery of chickpeas, peas and lentils recently harvested in Australia. This is not unexpected, as Australia had made significant forward of these pulses over the fall while their crop was looking unusually promising.

We anticipate shipments of Canadian peas to resume in style in the Feb./ March ‘16 shipment period.

Lentils – Supported by unprecedented demand from the Indian Subcontinent, lentil prices continue to break records. This is because the pace of lentil shipments is exceptional, and still demand has not abated. Especially bulk shipments have been fast and furious and have been added to ‘normal’ container exports. Even though we did not load bulk lentils during week 15, YTD bulk shipments are at 144% of last years’ pace.

 

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