MERCANTILE Market Insight Aug. 21, 2017

Marlene BoerschMarket Insight

Major grains & oilseeds markets

In the short term, we expect markets to stay close to home. We do expect speculators/speculative funds to raise their overall short position selling more grains and oilseeds especially as we get closer to US harvest pressure.

Funds: Index Funds did nothing on the week, while Speculators and Speculative Funds were again large sellers. With good carrying charges in the futures markets, we expect these funds to roll their September short to December and to increase their overall short against the December. Their current short of 17.2 million tonnes is small and we expect them to go to at least 50 million short. 


  • There are plenty of beans around and prices between origins are very competitive.
  • We saw sales registered with the USDA today for 463k mt to unknown destinations, and 198k mt to China. This is probably why we saw some buying on Friday.
  • Chinese crush margins remain very poor, but favor the meal side of the crush rather than oil.
  • We expect to see soybean futures hold at the support level of $9.25 per bushel basis November in the short term, before moving lower based on harvest pressure.


  • Producers only delivered 110,000 tonnes of canola in week 2; the very tight carryover is now showing.
  • Elevator companies are still showing a wide basis discount on their bid sheets, while they are paying premiums for new nearby deliveries. Growers need to keep back their new crop stocks so the “basis” will narrow.
  • While stocks remain tight and we have the huge lineup of vessels due to load in Vancouver, canola futures will remain firm compared to soybeans. As more new crop acres enter the supply chain, will follow soybeans lower.


  • Russia continues to lead the cash wheat market; Russia’s expected 80 myn tonnes of production is weighing on the wheat market.
  • At $20/mt over Russian 11.5 pro wheat, the French market will have to react at some point – and that will likely bring additional downward pressure to prices.
  • North American wheat remains too expensive, but is getting closer with a lower dollar and lower futures levels.


  • Cash durum prices are currently $9.25 per bushel FOB Northgate SK, which is down from 10.75 per bushel last week.
  • With drought affecting most major durum producing regions of the world, we are maintaining a cautiously bullish outlook for durum wheat going forward.

Barley/ Feed grains

  • We don’t see any shortges in world feed grains – for the first time in many years corn has dropped below the EU import threshold price to the EU and this means the EU has put in place an import levy.
  • This will keep EU imports nearby/slow and more pressure on corn sellers to find new destinations for nearby supplies. We see Dec corn trading down to $3.50 and likely $3.25 during the North Amerian harvest.


  • Farm bids in have strengthened on low elevator and processing plant deliveries, and despite lackluster demand and weak track prices for peas. This might point to a more hopeful outlook, as India may start looking for bids.


  • Harvest is well past the half way mark with very few interruptions this last week. Quality so far is maintain a above average standard, with virtually all samples showing the top two grades. Only in the last couple of harvest days did some lesser colour and higher stain show because of repeated localized showers.
  • There currently is demand for large greens; less so for small greens; reds will be quiet until some of the bulk product has been used on the Indian Subcontinent.
  • Yields remain very inconsistent; Red Lentils 12-1400lbs/ac; Small Greens 1150-1300lbs/ac; Large Greens 950-1000 lbs/ac.


  • No harvest activity yet in canaryseed. Crops in the southern half of the province look poor.