Advertise in Print | Subscriptions
Published February 17, 2014, 10:25 AM

Livestock feed bolsters soybeans

WINNIPEG, Manitoba — Most Manitoba elevators are no bid. Some North Dakota elevators are no longer taking Canadian soybeans, as they are having the same rail transportation issues as western Canada.

By: John Duvenaud, Agweek

WINNIPEG, Manitoba — Most Manitoba elevators are no bid. Some North Dakota elevators are no longer taking Canadian soybeans, as they are having the same rail transportation issues as western Canada.

The bullish case for soybeans is decent. Chicago Board of Trade March soybeans opened January at $12.70 per bushel and have increased to $13.35, up 9 cents Feb. 12. Most of the strength is due to the record pace of American exports — 12 percent above the previous high set in 2011.

Adding to the strength are highly profitable livestock feeding industries.

Many users bought hand-to-mouth through the fall as they expected soybeans to follow corn lower. Strong exports kept prices high however, so feeders have minimal inventory.

American crushers are struggling to get beans into their facilities.

Hopper cars are hard to come by, rail traffic is slow and barge freight rates are at record levels.

American old-crop stocks are tight. The carryover will be 150 million bushels this summer. If the U.S. does run short, it would be by August-September, by which time it should be easy to import from Brazil.

Tight Argentine farmer soybean holding is restraining exports. Argentina is the world’s largest soymeal exporter but inflation is about 30 percent plus the government taxes on soybean exports at 35 percent. Farmers are keeping their soybeans at home, if they can.

There’s also a bearish case for soybeans. The gargantuan South American crop has already started to be harvested. It is proceeding well and looks to be about 161 million metric tons, 9.6 percent larger than last year, but down 5 million metric tons on recent dryness. The American 2013 soybean crop was just under 90 million metric tons.

Brazil had horrendous shipping problems last year, which forced China to continue buying in the U.S., and that might be the case again.

Another negative is the spread of porcine epidemic diarrhea (PED), the new pig virus that has already killed millions of piglets in North America. It now looks like the spread might be through pig blood in commercial hog feed, and the disease might eventually be contained.

There appear to be only two buyers in southern Manitoba. Delmar Commodities is paying $11.36 per bushel delivered to Jordan. Its February basis is $1.95 under CBOT March. You may be able to deliver immediately but you’re probably looking at late February. Some North Dakota elevators are still buying Canadian soybeans and you can deliver direct. Expect a basis of about 90 cents under CBOT March.


Canola prices continue to trade in a sideways pattern because of larger available stocks and a year-over-year decline in demand. For the week ending Jan. 26, crop year-to-date exports were 3.5 million metric tons, compared with 3.9 million last year for the same period. The crop year-to-date crush was 3.4 million metric tons to Jan. 29, compared with 3.6 million last year. It appears that the canola carryout for the 2013 to ’14 crop year has potential to reach 3 million metric tons, which would be a record.

Basis levels remain weak and the March to May spread has moved out to full carry. Crushers and exporters appear to have their nearby requirements covered and rail delays continue to cause a backlog in the system.

There is potential for larger Chinese demand during the summer months, and we anticipate the export pace will increase at that time. This may cause a small, short-term rally. The market is also starting to factor in a Canadian acreage increase of 4 to 8 percent for 2014.

South American soybean harvest progress will move into full swing later in March. Strong soymeal values continue to underpin the overall soy complex, but this demand should ease once export business starts to switch over to South America, rather than U.S. There is no real bright spot for the canola market at this time. Canola will remain divorced from the soybean market in the next few months because of the burdensome Canadian fundamentals.


The long-term downward trend in Minneapolis wheat appears to be coming to an end. We are not saying there is a bull market around the corner, but the market is stabilizing at the lower levels. U.S. winter wheat crop conditions came in lower than anticipated, which caused a short covering rally in all wheat markets. Traders are also anticipating increased export business later in spring when weather turns warmer and logistics in Canada improve.

The market is not as bearish as it was two months ago, and the focus will slowly turn to upcoming production. After last year’s bumper crop, the market is anticipating a year-over-year decline in wheat acreage and production in Canada. U.S. wheat production will also be down because of a sharp decrease in soft red winter wheat acres and minor decrease in hard red spring acres. Russia, Ukraine and Europe winter wheat regions are in good shape with sufficient snow cover.

We expect production from these three major exporters to be similar to 2013.

Talk in the Canadian industry suggests that the rail backlog is almost over the hump of delays. By the end of February, we expect overall movement to increase. Many companies are not showing wheat bids at this time until late in the crop year.

The commercial system is basically plugged in the country.

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 or visit