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Weekly Market Recap:
The week’s markets end mostly lower Friday with profit-taking and re-positioning before this month's end.
StatCan report came out and trade estimates were caught offside a few commodities. Read on to see.
Daily price move limits were expanded on corn from $0.35/bu to $0.50/bu, soybeans $0.90/bu to $1.15/bu and lowered on wheat futures from $0.85 to $0.70/bu.
Deals of the week:
$28.20/bu old-crop canola, $25.50/bu new-crop canola
$15.30+/bu old crop, $14.50+/bu new-crop CWRS
Canola: Canola was up and down this week but remains strong. Monday, canola futures moved down once Indonesia explained that it wasn't banning crude palm oil from export (just their refined, bleached, deodorized palm oil products). Tuesday, canola futures bounced back when StatCan released intended seeded acres to be 7% lower than last year at 20.9 million acres. Traders were not expecting that steep of a decline and now our ending stocks are looking to be even tighter, making buyers nervous. There's little room for any hiccups in production. Wednesday, canola received another boost and soared higher, after Indonesia took back what they said and once again included crude palm oil in their export ban. Of note, it is not expected this ban will remain on fully for more than a few weeks as Indonesia's storage capacity is limited. Canola saw losses on Friday due to profit-taking and end-of-month repositioning.
Soybean futures have been holding strong at the top end of charts. Soybean supplies are reported to be tight into the end of summer. Brazil might be out of beans by Aug/Sep., that's why we're seeing good new crop export sales with buyers like China looking to cover their needs. The strong tone of the veg oil markets are also lending a hand of support. Soy oil hits new all-time highs earlier this week. There is chatter though, that if U.S. corn cannot get planted in time then more acres may be converted to beans.
Canola futures traded up over $1,200/MT and I've seen some old crop bids reach over $28/bu! New crop bids keep climbing too with bids achieving $25.50/bu.
Wheat: Even though StatCan raised our spring wheat acres to be 7% over last year, there was good support for Minneapolis wheat futures this week due to less than ideal weather conditions in the U.S. Cold and wet weather in the northern Plains is delaying spring wheat planting. The soil isn't warming up too quickly and there are warnings of another cold front and freeze risk again over the same area late next week - May 5-8th. Even though there are delays, a decline in yield for late seeding isn't as much of a concern as it is for corn. Farmers are pretty good at getting acres in the ground quickly if need be. Across the prairies, there are concerns that lingering dryness will remain for most of May over central and southern AB and SK. Earlier this week, front-month spring wheat futures poked over $12 then backed off.
Chicago and Kansas wheat futures came under pressure as a large moisture event is set to blanket the entire central US. Although we all know the Kansas winter wheat crop is in terrible shape, its rating was reduced again this week from 30% down to 27% good to excellent. The US dollar also hit new 19-year highs this week, weighing on US commodity futures like wheat.
StatCan did release much higher durum acres. Up 12.5% this year to 6.2 million acres which make it the largest durum acres in 10 yrs (but similar to 2018).
Barley: StatCan reported Barley acres to be down 9.7% at 7.5 million acres, but it's still the third-largest in the past 10 yrs. If we do pull off an average yield, this would result in a total barley production number that is above our 5-year average, potentially weighing on prices. On the other hand, this year is unlike any other and anything could happen. Russia is likely to export a chunk of its barley to China, dampening the need for Canadian barley.
Feed barley bids have seen a little boost this past week in many areas. Watch corn for barley price direction.
All eyes are on corn right now. Corn futures are super strong and receiving support from multiple fronts. Much of Brazil's safrinha crop is too dry and the forecast remains that way (right now). Next, we have the U.S. corn belt which is too cold and wet causing planting delays. Monday it was reported that 7% of corn was planted which was below the five-year average of 15%. The trade is watching this closely as there is a correlated yield drag if corn is planted later than May 10th. The U.S. needs to produce a big yield with its lower intended acres this year. As noted above, the cold wet weather looks to hang around all next week.
China has made purchases of both old and new crop U.S. corn mid-week reflecting China's concerns with Ukraine being off the market (Ukraine was one of China's primary export suppliers of corn). Corn futures are inching closer to their historic high of $8.40/bu.
Peas: StatCan reported that farmers will cut pea acres back by 7% which would make it the lowest acres since 2013. The bigger cut will be coming from green pea acres as prices and demand have not been encouraging this past year. Merchants have told me they just have no one offering to buy them. On yellows, much will depend on China's demand. I have seen some new-crop pea prices adjust a bit higher this week.
Oats: StatCan reported a 16.6% increase in oat acres almost 4 million acres. This would represent the largest acres in the past 10 yrs, however, in 2020 we did grow a whopping 3.84 million acres. Current thoughts are that Canadian oats should be plentiful. There's less worry about production as the majority of oat acres are grown outside of the existing dry areas of southern AB and southwest SK. After the report, some buyers pulled their bids completely as they use the wait and see approach, others decreased their bids by $1/bu and some have remained relatively unchanged. Wide variances exist in oat bids. There's still lots of time for farmers to change their minds and plant something else, so it will be interesting to see how the oat acreage number gets revised later.
Around the farm: Waiting for all our headland snow to melt away. We pulled out all of my trucks, trailers and finally, the seeder! We had our NH dealer rigging up our newest tractor to the seed drill, mechanics doing a steering alignment on a semi (which turned into fixing much more than that), input suppliers delivering seed and chem and a loader pushing trees down on some new land. Tomorrow we are picking up treated seed wheat and gearing up to start seeding late next week!!
I hope you all had a productive week! Stay safe!
Cheers.
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