Oats harvest underwayThe oat harvest should peak this week with excellent yields and quality.
By: John Duvenaud, Agweek
The oat harvest should peak this week with excellent yields and quality.
Early oats are good and heavy. Most samples are coming in at 45, 46 and 47 pounds per bushel. Quality is phenomenal.
AgCanada earlier predicted a 3.2-million-metric-ton Canadian oat crop, up half a million metric tons from 2012 but with total supplies about the same — 3.5 million metric tons — as a result of the tight carry-in. With yields so far running from 120 to 160 bushels per acre, the total crop could be even larger.
Later harvested oats might not match the standard set by early oats but the 2013 oat crop is fabulous. The risk of substantial frost damage is minimal.
Prices, in the big picture, remain on the high side. There’s no longer many farmers hoping for $4 per bushel, which was attained when stocks were tight last winter. Now oats are pouring into town.
Emerson Milling in Manitoba is at $3.10 per bushel spot delivered and $3.25 for December delivery.
Grain Millers in Yorkton, Saskatchewan, is $3.05 for April delivery. Elevator bids range from $2.60 in northern Saskatchewan to $3 in the Red River Valley.
Mustard is another crop with both good yields and quality. Harvest is over the halfway mark. Quality is generally good with most grading No 1. The only quality problem is green seeds.
Yields on yellow is better than on brown, the reverse of most years.
Brown may be averaging 20 to 21 bushels per acre. Yellows are nearer 30 bushels.
The big difference in mustard markets is that Canada, a major mustard exporter, has finally moved out the big carryover supplies. The carryover at July 2011 was a hefty 116,000 metric tons. By next summer, that will probably be down to 20,000 metric tons.
Prices had a nice rally last fall. Yellow has been flat all winter and dropped a bit in the past couple of weeks. Brown was also flat most of the winter, but is rallying now. Oriental has been the cheapest mustard, but is now relatively cheap and being supported by canola prices.
There is mild price pressure as farmers look to dump a load or two for bin space. That should quickly ease.
It will be hard to move quantities of mustard while processors take their contracted material.
Spot bids for brown are 35 cents per pound, January and February is 37 cents and March and April is 38 cents.
Spot yellow is 38 cents with January and February at 40 cents. Oriental is 28 to 28½ cents per pound spot.
Canola market digests big crop
Canola prices came under pressure the week ending Sept. 6, dropping nearly $40 per metric ton, as the market starts to digest the larger crop size and surge in farmer selling. Yield reports are confirming traders’ expectations for a 16-million-metric-ton crop, compared with the Statistics Canada survey of 14.7 million metric tons.
Producer deliveries are increasing and basis levels are deteriorating; the November to January futures spread is widening reflecting the increase in commercial supplies. Despite the weaker cash prices, export demand has been noticeably absent, given the softer vegetable oil prices on the world market.
Outside influences are weighing on canola prices. It is difficult to project how much U.S. soybean yield projections have deteriorated in the past month, with major analysts showing a wide range in production estimates. But the soymeal supplies will increase in the next month, which will be a main factor spilling over into the soybean market. Speculative funds were active sellers of canola with the futures trading below longer-term moving averages.
We feel the market will continue to grind lower through harvest. We are not putting too much emphasis on the dryer Midwest weather pattern in the past month because conditions were quite favorable earlier in summer. Therefore, we are only projecting a minor decline in U.S. soybean yield potential.
Durum yield reports are coming in larger than anticipated and we would not be surprised to see the final Canadian crop size reach 5.4 million metric tons, compared with the Statistics Canada estimate of 5.1 million metric tons. Given the larger crop size, the export program could reach 4.5 million metric tons for the 2013 to ’14 crop year, 1 million metric tons above the 10-year average.
This will be the first year Western Canada experiences a crop size near the 10-year average in an open market environment. It is important to realize that durum demand is inelastic, therefore, a small change in supply can result in drastic changes in price. Despite the smaller U.S. crop, the year-over-year increase in Canadian supplies is weighing on world export prices.
Elevator durum bids remain quite high relative to the historical average.
We are concerned that the large Canadian export program will cause world prices to trade lower later in fall. Canadian producers were orderly marketers during the 2012 to ’13 crop year selling regular increments and we expect a similar selling pattern this year. We are concerned the market will function to discourage acreage later in the crop year for the 2014 growing season. In certain U.S. locations, durum is trading at a discount to hard red spring wheat.