Major grains & oilseeds markets

USDA’s WASDE report: It gave little change in the US production numbers, but did give greater world production which was seen as bearish. Speculative elements were big sellers both before and after the release of the WASDE numbers.

Weather reports from around the world were benign and suggest a good crop is in the offing. There are still some concerns regarding conditions in the USA, so we can expect weather to be an element to contend with through July for planting and emergence and through November for harvest.

All futures markets are tottering around support levels; however, we feel it’s only a matter of time before corn and soybeans head to lower levels unless something new occurs.

Next week we think wheat could rally as we have good wheat business on the radar screen and we would expect to see some North American wheat feature to Saudi Arabia.

We hear some US corn (maybe 5 cargoes) traded to China ex the PNW for Apl/May shipment, so markets will not be so bearish in the short term.

Soybeans

• Funds still own a lot of soybeans so this market remains tricky.
• If it were not for funds, given the WASDE numbers and the charts, we would say soybeans will break through $10.00 support. However, the huge Fund long makes this less definitive.
• Longer term, soybeans are definitely bearish, but old crop positions can still be squeezed, which makes us wary.

Canola

• In week 31 growers delivered 394,000 tonnes, domestic consumption was 160,000 tonnes, and exports were 191,000 tonnes. The year to date consumption was 12.1 myn tonnes compared to 10.8 myn tonnes in the previous year to date.
• The balance sheet remains snug and canola remains competitively priced for local and foreign crushers.
• Canola oil in the EU continues to be priced around US$900/mt, which still makes Canadian canola interesting in the EU for crushing.

Wheat

• Short term, we expect futures to stay reasonably strong while there seems to be good cash demand and a lack of cheap offers from the FSU.
• Longer term, we see wheat following corn lower while weather remains benign and we get closer to the European new crop harvest.

Durum

• Durum exports during week 31 amounted to 48k mt and 2.5 million mt year-to-date. This is still 15% or 423k mt lower than last year-to-date.
• We do not expect values to improve much for this year.

Barley

• The WASDE report increased world Barley production by 3 myn tonnes.
• Optional origin barley is available at $153 FOB, so Canadian barley remains uncompetitive in export markets.

Peas

• The Canadian market has shown a lot of resiliency over the past while as it weathers the fumigation debate with India. Inland prices did soften somewhat over the past two weeks, but this has fallen far short of a major adjustment in prices.  We think the primary reason are the excellent level of YTD shipments and good levels forward sales for the spring, and the fact that the bulk flow of peas has so far not been interrupted. We expect current crop prices to remain fairly firm.
• New crop prices are not exactly exciting for farmers, but combined with good movement and ready pricing opportunities throughout the year, it is enough to keep peas in the rotations of Prairie farmers.

Lentils

• Lentils have been more heavily affected by the fumigation issue with India than peas. Container traffic to India has been stopped, and now containers are congesting the port. Finding alternate destinations this has affected values especially in Bangladesh and in Turkey.
• The slowdown in exports is reflected in both falling current crop and new crop bids.
• Given the changed price outlook for lentils combined with the disease pressure especially in west-central Saskatchewan, we marginally lowered our previous acreage forecast for next crop year.

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