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Published May 28, 2013, 10:17 AM

Flax market hanging on

Flax continues to move smoothly through the system with $17 per bushel delivered available.

By: John Duvenaud, Agweek

WINNIPEG, Manitoba — Flax continues to move smoothly through the system with $17 per bushel delivered available. Processors are mostly hauling in enough already-purchased flax to keep working inventories adequate to meet their sales commitments.

Few farmers are actively looking to market much of anything these days. Where it’s too wet to seed, it’s probably also too wet to haul. Expect current levels to hang in until new crop becomes available.

Expect new crop flax to trade at a discount.

You’ll be lucky to find $13 if you want to contract today. Thirteen-dollar flax, in the scheme of things, is not a bad price but it’s nothing special either. Right now, markets are assuming huge supplies of everything this fall and that is certainly the most probable scenario. The growing season, however, is still in front of us.

Lentil market steady

Lentil seeding is progressing well with probably 40 to 45 percent in the ground. In general, seeding is being done under good conditions.

Old crop markets have picked up a hair, at least for reds. India is buying, as are a few of the smaller Asian markets. You should be able to find 24 ½ to 24 ¾ cents per pound for your reds.

Green lentils are starting to show their age. Product that graded a No. 2 in the fall is now coming in as an X3. Lairds are easy to move.

Your No. 2s will fetch 22 to 23 cents per pound. Eston trade is seasonal and the big shipping season is rapidly closing. Few processors are working with high-quality Estons. Most want a good 2 ,which should bring 21 to 22 cents.

Soybeans off highs

Soybeans continue to trade at decent levels. Prices have stalled, but $13.25 per bushel is still available. That’s off the $15 per bushel that was available in October, but still above the $11 we were getting last spring.

Most Manitoba beans have been delivered. Maybe 10 to 15 percent are still in farmers’ bins. Chicago Board of Trade futures suggest lower soybean prices going forward. Spot July is $14.80, August is $13.90, September is $12.88 and November is $12.20. Deferred months then start rising.

The actual drop may not be quite this precipitous, since planting is late and the old crop supplies have that much longer before new crop becomes available.

At some point, cash buyers will step back, especially if it looks like the new crop is made, but that’s a ways ahead.

Slower deliveries support canola

Producer deliveries have slowed causing commercial supplies to decline to pipeline levels. July futures trade near contract highs and basis levels have remained firm to attract farmer selling. Exporters and crushers are struggling to fulfill nearby requirements, although we continue to project slower demand during the last of the crop year.

Look for the cash market to trade sideways in upcoming weeks until the slower demand materializes. Producer selling picks up after seeding is finished. The market will remain volatile because once demand eases, basis levels and the futures will come under pressure.

New crop malt barley

Domestic malting companies have been aggressively contracting new crop production in the past month. Prices have remained near historical highs for malt barley as they try to encourage acres. This is a favorable time to contract new crop. First, the malt premium over feed barley for new crop is near $1 per bushel, which is historically strong. If favorable growing conditions materialize, this malt premium will erode.

If adverse conditions prevail during summer and harvest, the market has little upside potential because the malt market is at historical highs. Secondly, given the larger U.S. and world coarse grain production, the overall feed complex will come under pressure.

Feed barley update

Feedlot bids continue near historical highs of $295 to $297. Wheat bids fluctuate from $290 to $293. Wheat is a discount to barley as the barley market functions to ration demand. We are seeing widespread usage of low protein milling wheat in feed channels, which will limit the upside in barley prices. Cattle on feed numbers in Alberta and Saskatchewan are above the seasonal high, and domestic demand will start to decline into the summer months. We feel comfortable with our recommendation to be 100 percent sold on the 2012 crop.

For new crop, certain larger feeding operations are showing bids at $5 per bushel delivered. But most feedlots are waiting for the corn and barley crops to develop before booking forward purchases.

Export demand is quiet for new crop with the world market trading at $240 freight on board Vancouver, British Columbia, which equates to $3.70 per bushel in central Saskatchewan.

Editor's Note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 1-800-567-5671, email admin@canadagrain.com or visit www.canadagrain.com.

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