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Published July 08, 2013, 11:14 AM

Pea market down

Farmers in the Red River Valley had gotten used to a 3-inch rain every second year, and another 10-bushel pea crop. Once soybeans became a viable alternative pulse, peas quickly went by the wayside — an unlamented loss.

By: John Duvenaud, Agweek

WINNIPEG, Manitoba — Farmers in the Red River Valley had gotten used to a 3-inch rain every second year, and another 10-bushel pea crop. Once soybeans became a viable alternative pulse, peas quickly went by the wayside — an unlamented loss.

Farmers further west have those excess water issues this year with the peas. Heavy rains through much of Saskatchewan have already damaged probably 10 percent of the pea crop — perhaps as high as 20 percent in the wettest areas. These plants may not be dead but they have been set back. And some of the plants are dead. Other pea plants will take over some of the potential yield, but production potential has been lost.

The mix on the 3.37 million acres of peas in Western Canada is probably 20 to 25 percent green and 75 to 80 percent yellow. The 2013 American crop of 850,000 acres will typically have a higher proportion of greens.

Most of the Canadian new crop greens have already been contracted at about $12.50 per bushel. Yellow new crop bids never got much above $8 and fewer are pre-priced.

Canary still flat

Canary prices are reacting, mildly, to the low acreage numbers reported the week ending Jun 28 by Statistics Canada. They had Saskatchewan plantings down 45 percent, from 300,000 acres in 2012 to 165,000 acres this year. On June 27, the best price you could probably find was 26 ½ to 27 cents per pound, freight on board but on July 2, 27 ½ was out there.

The big jump in American proso millet plantings will go some way to replacing the canary not planted in Canada, but there are still going to be some canary users forced to find a substitute.

Not many farmers are actively looking to sell canary these days, beyond those clearing bin space.

Caution on oats

Oat prices continue well above their average of the past several years and are probably still the highest you have ever seen. Users are still active buyers and, of course, they have to be because none has enough storage to be out of the market for any length of time. But Saskatchewan bids are showing signs of a triple top. The bull market is decelerating.

Prices are rolling over. Manitoba and Saskatchewan cash prices normally lead Chicago Board of Trade futures, and those futures are falling.

Plantings are higher in both Canada and the U.S. Oat seasonals turn down in July and August.

Larger canola and soybean acres

Statistics Canada has canola acres at 19.7 million, which is up from the April estimate of 19.1 million, but down from the 2012 acres of 21.5 million.

Given the current crop conditions, we estimate production at 14.2 million metric tons, compared with 14.6 million last year. The canola crop is moving into the critical flowering stage, and yield will be determined in the next month. While canola fundamentals will remain tight for 2013 and 2014, remember that canola is part of a larger oilseed complex.

Canola has a sharp inverse between old and new crop prices, encouraging you not to hold old crop stocks into the new crop year.

The U.S. Department of Agriculture estimated soybean acres at 77.7 million, up from the March survey of 77.1 million and up from the 2012 acreage of 77.2 million.

The soybean complex is bearish from current levels with larger new crop stocks overhanging the old crop market.

Weaker canola crush margins for new crop will continue to weigh on the market moving forward.

Larger corn acres

USDA estimated U.S. corn acres at 97.4 million, which was higher than the March intentions of 97.3 million and 2012 plantings of 97.2 million. Given the current crop ratings, the corn market will function to encourage demand in the 2013 to ’14 crop year. This will set the price floor for all coarse grains and wheat.

Statistics Canada estimated wheat acres at 19.1 million, up from 2012’s 16.9 million. USDA estimated spring wheat area at 12.3 million, which is basically the same as last year. U.S. hard and soft red winter wheat production was slightly higher than we expected as harvest progresses.

Cash barley prices in Southern Alberta dropped to $278 delivered Lethbridge last week, down $20 per metric ton from the May highs. Feedlots have a larger portion of their July demand covered and farmers continue to liquidate remaining on-farm stocks, given the large inverse between old and new crop prices.

New crop corn has potential to trade down to $4 per bushel during harvest.

No. 1 Canadian western red spring wheat has potential to dip down to $6 to $6.50 during the fall. Basis levels for milling wheat usually make seasonal lows in summer and early fall. Barley in Lethbridge could trade down to $3.75 in September.

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

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