Major grains & oilseeds markets

Big fund selling was the feature of the week; spec funds were big seller of corn and wheat.

Weather was good for growing conditions in all major production areas.

Cash business was very slow, so futures selling had no offset in cash buying.

Futures have reached the levels we forecast some weeks back and if conditions continue as they are, we can see markets drop at least another 25 cents before we see the Spec Funds think about covering. Production estimates from around the world seem to be growing, which makes consumers reluctant to take on deferred purchases for now.

Soybeans

• Another week without any USDA sales registrations of US soybean to China; it has been almost two months since we had US soybean sales registrations.
• Values have dropped down to where we forecast, and we probably have a bit more to go before we see the specs think about covering.
• The corn and wheat values have also dropped, so soybeans still look more attractive to plant than other crops.
• Index Funds still own a large amount of the soy complex. Now that the market is moving towards a carrying charge, it could be very bearish if they chose to unload.

Canola

• Growers delivered 400,000 tonnes canola in week 33, domestic consumption was said to be 190,000 tonnes, and exports were 256,000 tonnes. The visible was 1.48 myn tonnes.
• Based on our estimates of domestic use and exports, to leave the carryout at the same level as the current visible, we need growers to deliver 324,000 tonnes for the remaining weeks; we think that that much canola is out there.
• We think soybeans are a better spec sale than canola.

Wheat

• The EU will harvest 10 myn tonnes more than last year, Russia will be 5 myn tonnes less, but with 10 myn tonnes more beginning stocks. The Southern Hemisphere has just harvested around 16 myn tonnes more wheat than last year and is about to throw an additional 35 myn tonnes of corn at the market to compete with feed wheat.
• Wheat cannot turn round without a serious weather problem affecting Northern Hemispere wheat and/or corn. At present world weather is looking pretty good.

Durum

• Durum exports during week 33 amounted to 71k mt and 2.6 million mt year-to-date. This is 14% or 438k mt lower than last year-to-date.
• Libya extended its deadline for offers in its durum tender to the end of March. It is looking for 50,000 mt of for April-May shipment.
• We do not expect values to improve much for this year.

Barley

• Saudi Arabia bought 1.5 million mt last weekend at prices ranging from US$180 to $193 basis Jeddah, and $187 to $193 basis Dammam.
• Canadian barley remains uncompetitive in export markets.

 Peas

• Mercantile is staying with its forecast for a strong export performance this year.
• We expect current crop pea values to remain steady, although weak prices for major commodities are not helpful.
• new crop peas, we note that the extension of the derogation to Methyl Bromide fumigation by India does not extend into new crop.

Lentils

• Lentils are the crop that suffered most from the fumigation hurdle put up by the Indian government.
• We are back to $25/cwt for reds
• The three-month extension does not cover new crop lentil shipments, leaving new crop lentils vulnerable.