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Published October 21, 2013, 11:36 AM

Crops see good moisture

The prairie crop is mostly harvested.

By: John Duvenaud, Agweek

Farmer selling limits strength in canola

WINNIPEG, Manitoba — The prairie crop is mostly harvested. The topsoil had been getting a bit dry for fall anhydrous application but rain has fallen in many areas and conditions look good.

Producer deliveries into the elevator system continue to run at 300,000 metric tons per week, which has limited the upside in canola futures and kept basis levels under pressure. The November-January futures spread continues to trade at full carry reflecting the large stocks in the system.

It also shows that grain companies are well covered for their nearby requirements.

U.S. soybean values have weakened as the harvest progresses. The November-January soybean futures spread was trading at an inverse, but is now trading near even money. This suggests that the fundamentals are not as tight as earlier anticipated and also reflects a weaker tone in the cash market. We expect further downside in the soybean complex, which will continue to spill over into canola.

Looking forward, many farmers are inquiring about potential upside and when we will make our next sale. The canola market will have some breathing room April through July. The oilseed complex will have digested the South American soybean harvest and the focus will turn to seeding intentions in North America. Many traders are factoring in a record soybean crop in Brazil and Argentina, but if conditions don’t materialize as expected, the market will need to encourage soybean acres in the U.S.

There are no significant risks to drive the market higher from now until January so look for canola to trade sideways. Current South American conditions are favorable.

Barley remains sluggish

Cash barley prices in Southern Alberta continue to trade at $175 to $180 per metric ton delivered. Given the lower values in Western Canada, we are starting to see some export movement off the West Coast. Some optional origin sales to the Middle East have been switched to Canada. The feed barley market is functioning to encourage offshore movement and prices are now competitive on the world market.

In the short term, the feed grains complex continues to digest the record U.S. corn harvest. We anticipate larger imports of U.S. corn into Southern Alberta this year, which will cap any strength in barley.

Cattle on feed inventories in Alberta and Saskatchewan make a seasonal high in late April. There is a fair amount of uncertainty in winter barley acreage in the Ukraine and Russia so we may see less competition on the world market in the latter half of the crop year.

Wild Oats Grainworld 2014

Grain farmers had an easy marketing year in 2013. Quality was good, demand was solid, the handling system worked smoothly and prices were great. Marketing in 2014 may be a different story. Prices have been dropping for more than a year. It’s time to sharpen the pencils once again.

Wild Oats Grainworld 2014, Canada’s Annual Ag Outlook Conference, is taking place Feb. 24 and 25, at the Fairmont Hotel in Winnipeg.

Each year traders in the various crops that we grow in western Canada provide an outlook for the crop they trade. The purpose is to provide farmers with an informed idea of the profitability of the cropping alternatives. Every player in the chain benefits when the right mix of crops is planted.

Speakers include: Tracy Lussier, manager of canola trading at Louis Dreyfus Canada Ltd., covering canola; John Griffith, senior durum merchandiser with CHS Inc., covering durum; and Jim Beusekom, a grain broker with Market Place Commodities, covering feed barley. Dennis Gartman, publisher of The Gartman Letter, speaks at the Monday lunch sponsored by Chippingham Financial Group and Charlie Mayer closes with a few thoughts at the Tuesday lunch.

Early-bird registration is open at $400. Register at wildoatsgrainworld.com or call either 800-567-5671 or 204-942-1459.

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 admin@canadagrain.com or visit canadagrain.com.

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