Markets show some strengthFutures had a good day Aug. 19, with canola up $12 per ton, soybeans up 45 cents and corn up 12 cents per bushel. The corn and bean crops are running out of water right when they’re filling.
By: John Duvenaud, Agweek
WINNIPEG, Manitoba — Futures had a good day Aug. 19, with canola up $12 per ton, soybeans up 45 cents and corn up 12 cents per bushel. The corn and bean crops are running out of water right when they’re filling.
Funds are short and much of this big rally would be short-covering. Prices were lower Aug. 20 but only by a small amount.
Most winter wheat has been harvested with yields from 60 to 80 bushels per acre.
Spring cereal harvest is underway. Yields are good, but maybe not as good as last year. Peas have been combined and other pulses are being desiccated. Canola is being swathed.
Most spring crops, however, are close but not yet ready.
In the U.S., spring wheat is 18 percent harvested, with average being 38 percent.
Oats are 68 percent harvested with the average for this date being 79 percent.
American corn and soybean crop condition ratings each dropped 2 percent in the past week to 62 percent good to excellent. Both crops remain two weeks behind normal development.
Farmer selling weighs on canola
Western Canadian farmers have stepped up sales of canola recently. It appears the canola harvest will get underway during the first week of September and the market is anticipating a surge in farmer deliveries. Producer deliveries into the elevator system could reach more than 400,000 metric tons per week during September and October.
Export and domestic demand is projected at 1.2 million metric tons per month, so you can see commercial stocks will be increasing during this time.
Basis levels are expected to weaken as supplies build in the elevator system.
Looking at the world oilseed situation, we think soybeans are overvalued, given the potential crop size. At the same time, demand for the meal is waning at the higher levels as buyers await new crop supplies.
Durum market focuses on quality
Durum prices in Western Canada continue to hold value moving into the harvest season. Canadian exporters have a fairly large export program on the books based on current price levels in the country system, so we expect the market to stay firm during the first half of the crop year. We may see some pressure during harvest as the elevator system fills up, but this dip is expected to be temporary.
The French durum harvest is in the final stages and approximately 75 percent of the crop is expected to be milling quality. The Italian and Spanish crop was larger than last year, but protein levels were below average, which has spurred on the export program from Western Canada.
If the prairies experience abnormal harvest conditions downgrading the crop, higher protein No.1 and 2 Canadian western amber durum will extract a premium in the market because of the lower supply of higher protein milling quality.
The U.S. Department of Agriculture marginally increased the U.S. crop, but this was factored into the market, given the favorable growing conditions. Algeria is expected to step forward in September for large volumes of No.1 and 2 Canadian western amber durum.
This trade will determine the price structure for the fall period because they are the largest importer of durum.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 1-800-567-5671, e-mail firstname.lastname@example.org or visit canadagrain.com.