Flax Market steadyThe flax market has been quite steady fro some time.
By: John Duvenaud, Agweek
WINNIPEG, Manitoba — The flax market has been quite steady for some time. There has been some mild weakening the past couple of months, although prices have strengthened in the past few days.
There isn’t a lot to suggest any great price move any time soon. Western Canada produced 660,000 metric tons of flax this year, up from 490,000 a year ago. Total supplies went from 640,000 to 740,000 metric tons.
Most of that extra flax will be exported, but the carryover will likely increase, as well.
Prices are hanging in pretty good. Food grade flax trades around $14 per bushel delivered with industrial flax about 50 cents cheaper. The main difference between food and industrial use is the presence of dark kernels. Dark kernels normally are not welcome in food applications.
This is a nice, quiet market with decent prices. Long-term charts suggest that flax prices tend to rise until early November, and then ease lower through winter. Compared with canola, flax prices are expensive.
Good price for green peas
Green peas are back to $12 per bushel, which is a pretty good price for a crop that was reported at 600,000 metric tons this year. Traders doubt production was that high, mostly because those peas are not coming to town very fast. Some estimates are as low as 400,000 metric tons.
Green prices have been creeping higher with a $2 bounce from harvest lows.
Some of the recent strength may be coming from end users who just couldn’t source last year. After that scare (imagine if you simply couldn’t buy seed or fertilizer, at any price) some users are probably having their storage with some product in at all times. Demand may ease off once these one-time orders are filled.
Demand may also drop off when the Argentine and Australian pea harvests begin, which is about now.
Yellow prices are being held up by feed pea prices. Yellow demand is weak and this is the pea that you’ll have more trouble moving.
Indian demand is weak because of the country’s own good crops and just-completed harvest, plus ongoing difficulties with their currency weakness.
Traders talk of the slowness of the yellow market and the narrow margins.
Allan Johnston Grain Marketing is buying yellows at $6.50 per bushel freight on board farm Saskatchewan with December and January shipping.
Pea markets will probably be stable through the winter. Yellow exports are slow, but peas remain the cheapest human-edible protein in a hungry world and Chinese demand is steady. Feed pea prices should be at least steady if this is the bottom of the soybean market.
Canola under the weight of bean crop
Soybean values came under pressure as harvest progresses. Yields continue to come in better than expected. Weakness in soybeans and softer meal spilled over into canola causing elevator bids to make new seasonal lows. Farmer selling continues with softer basis levels. Exporters and crushers have nearby requirements covered. Futures spreads continue to trade near full carry, reflecting the larger stocks in the elevator system.
South American soybean planting continues well. Brazil is 60 percent complete and Argentina is 10 percent.
Since mid-October, the January to March soybean futures spread has moved from 20 cent inverse to a 15-cent inverse; the fundamental structure is not as tight. This spread will likely continue to narrow as the soybean harvest moves into the final stages. Soymeal, the main factor holding up beans, has lost $55 per metric ton since the highs in September.
Expect canola to trade sideways in the next month. There is no reason to rally. We project a 2013-14 canola carryout near 2.4 million metric tons, up from the average of 1.6 million. Large canola stocks and a weaker soybean complex will continue to weigh on canola.
Canadian barley production will finish near 10 million metric tons, of which 5 million will make malt. Overall demand is only about 2.5 million metric tons. Domestic malting companies have a good portion of their demand covered until spring. Exporters who have made sales continue to look for delivery commitments from farmers. Current export sales reflect the prices in the country.
Demand for mid- and low-protein spring wheat from central and south America has been a main factor underlying the latest wheat rally in Minneapolis and Kansas wheat futures. The Argentine wheat crop is estimated at 10 million metric tons and the Argentine government will start allowing a certain amount of wheat exports in January. Most of the demand from central and south America is covered until January. Therefore, the wheat market is coming under pressure. The Kansas wheat December to March futures spread has gone from an inverse to a small carry. This reflects the demand is weakening.
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 email@example.com or visit canadagrain.com.