Major grains & oilseeds markets – The futures markets were lower on the week following disappointing weekly export numbers (particularly wheat) and a sharply higher dollar. The markets rallied during the first part of the week but failed to break through resistance.
Cash wheat markets were quite active and prices a little higher as there was less wheat on offer from Eastern Europe. A new WASDE report is due this week and most analysts are expecting the USDA to find slightly higher production numbers and increases in carryover.
Soybeans – There is not much to say about soybeans as nothing has really changed, so until we see the WASDE report on Tuesday we do not have any comment. The market expects WASDE to come in with a carryout of 10 myn bushels above the October estimate of 425 myn bushels for 2015/16; anything higher would be quite bearish. In our view, longer-term the US carryout will work down to about 250 myn bushels, which is more in line with the history of WASDE estimates.
Canola – The current balance sheet is quite comfortable; we will need more export sales to maintain or increase the value of canola over soybeans.
Producers delivered 293,000 tonnes in week 13, the domestic usage was 150,000 tonnes, and exports were 263,000 tonnes. The visible supply slipped to 1.48 myn tonnes. The open interest in November has been taken care of. There was a small amount of canola delivered against futures to close out the open interest. We now have a concentration of open interest in the January futures.
Flaxseed – There finally were some sizeable bulk exports of flax last week; 19.1k mt off the West Coast to China and 9k mt from Thunder bay to Europe. have been virtually no sizeable bulk exports to date. This puts YTD bulk shipments slightly ahead of last years’.
Wheat – Algeria bought 350,000 tonnes optional origin durum (including Canadian) at just below $330 C&F, Ethiopia bought 850,000 tonnes of milling at $233-243, Jordan again got no offers at its tender, Egypt said it will shift to a world market based procurement price next season with additional direct subsidies. US export sales were dreadful at just 85,000 tonnes leaving the season total 472 myn bushels down 17% on last year, with inspections down 18%.
Durum – In trade, Algeria tendered and bought 350k mt of optional-origin durum at a reported $330.00 C&F; trade confirmation reports have credited this as being of Canadian-origin. In durum news, the EU Commission balance sheet update increased their yield estimate to 3.48 mt/ha versus 3.3 mt last month; this increased the EU output estimate to 8.42 myn mt versus 7.92 myn in Sept, and their durum carry grows to 1.1 myn mt versus 570k mt last month.
Feed Grains/ Barley – We expect the markets initially to react bearish to the WASDE report but after some profit taking the markets will start concentrate on the poor economics for next year’s plantings and strengthen. The dollar needs to be watched any further rally would be bearish grain futures.
Peas – Prices for peas have remained firm in Canada, even as shipping is slowing down while we get into the winter months. Yellow peas are bid at $9.50-10.00/bu in Saskatchewan depending on position. There are bids for new crop ’16 yellow peas at up to $8.50/bu SK ($9.00/bu AB). The weakening of the Canadian dollar is supportive to prices as well; the substantial drop in the Loonie over the past week backs Canadian pea prices by $0.15/bu.
Lentils – Lentil prices in Canada remain extraordinarily firm. Current crop #1 & #2 quality large greens fetch up to Cdn$52/cwt delivered cleaning plant, and #2 o/b reds for bulk shipment reached the $42/cwt level delivered country elevator. Even more unusual, new crop 2016 lentil prices have been issued and are as high as $35-37/cwt for #1 large greens and $33/cwt for #2 o/b red lentils. – While there is a possibility that new crop prices will increase even more, there are potential risks to growers of not locking in current new crop prices last week.
Faba Beans – Canadian fababean production this year is expected to reach 111k mt, up 4k mt or 4% over last years’ production. This is less than initially expected. Supply should be up min. 18k mt or 16%. Exports are expected to double (+23k mt), though competition by other exporters (Australia, UK, France) into the Middle East will be strong. Domestic use (feed) is thought to stay the same around 61k mt).
Canaryseed – The canaryseed balance sheet is tight, but not as snug as assumed earlier.
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