Flax trading at resistanceFlax has been in a sideways trading range since November of 2010, from a $12.50 per bushel basis to $15 per bushel basis at the elevator in Saskatchewan. Chart resistance is about $14.50.
By: John Duvenaud , Agweek
WINNIPEG, Manitoba — Flax has been in a sideways trading range since November of 2010, from a $12.50 per bushel basis to $15 per bushel basis at the elevator in Saskatchewan. Chart resistance is about $14.50. Present prices are right there, at about $14.55. Charts show a series of higher lows suggesting a breakout could be made at any time.
At any time does not necessarily mean any time soon, but nevertheless, the charts suggest holding. In the cash market, flax, which normally trades at a premium to canola, is currently even money.
If flax prices do make a move upward, the next resistance is $19.25 per bushel, dating from July 2008.
Canary starting to firm
It’s not a breakout, but canary prices, after sitting in the doldrums for months, have started to firm. Orders are starting to be made at 26 to 27 cents per pound freight-on-board farm. This is no big move, but it is the first positive indicator for some time.
Lentil markets are a bit softer. A No. 2 Laird fetches 18 cents per pound, freight-on-board farm Saskatch-
ewan, down from maybe 19 cents a week ago. It’s not a big drop, but it’s coming at what are already cheap levels.
The trade is discounting 2011 crop greens. For a buyer, it’s easy to distinguish a 2011 No. 2 green lentil from a 2012 No. 2. They both meet grade specs, but 2011’s will bring 16 to 17 cents, while the 2012’s will bring 18 cents.
Even 2012 No. 2’s are often subgraded to X2 or poor 2.
Red lentils trade at 19 to 19.5 cents per pound with the provision that they be shipped in February. Bids for later delivery are a bit lower.
Oats markets had a nice run in December, but fell off through the holidays and have been mostly flat since. Canadian Oats in Edmonton, Alberta, is paying $3.25 per bushel, and reports adequate supplies are still coming in, however feeders are picking up quite a few oats by buying freight-on-board farm.
Milling oats end-user markets are fully steady, as one would expect.
Oats have a solid place in human diets. The amount of oats that will be planted this spring still looks like it will be down from 2012. The crop budgets have a hard time competing. In addition, in Alberta at least, seed supplies may be an issue. Chicago oats futures have a poor handle on new crop demand.
Canola futures have strengthened. First, tighter stocks in Western Canada, along with steady domestic and export demand, has resulted in the firmer tone. Second, drier conditions in Argentina have lowered crop estimates for the soybean crop, lifting the overall soybean complex. The soybean and canola markets incorporated a risk premium because of the uncertainty in oilseed production. Finally, spec fund buying surfaced in canola and all commodities as investors took on additional risk with the economy moving full steam.
The risks are now changing, which could limit the upside in canola. We want to sell into this strength.
Barley prices ratchet higher
Cash barley bids in Southern Alberta have risen to $280 per metric ton delivered, up a solid $5 per metric ton from earlier in January. Adverse winter conditions have slowed farmer selling, resulting in the firmer tone. Prices for alternate feedgrains have also increased, with feed wheat reaching $300 delivered while imported dried distillers grains with solubles (DDGS) have strengthened by $15 per metric ton into the Lethbridge, Alberta, area.
The Canadian barley carryout is poised to drop to historical low levels at the end of the 2012 to ’13 crop year. The function of the market is to ration demand, which suggests exports need to slow and domestic prices need to move higher to encourage the use of alternate feedgrains.
Be patient with additional feed barley sales. Cattle on feed numbers will reach a seasonal peak in late April which will result in larger domestic demand.
The malt barley premium over feed has been relatively small this year because of the tight feedgrain fundamentals. At the same time, world malt values have struggled to move higher because of abundant malt barley supplies in the U.S. and Australia. Canada has missed business on the world market to major buyers such as China because of the strong competition.
Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 1-800-567-5671, email email@example.com or visit canadagrain.com.