Canaryseed market quietWINNIPEG, Manitoba — Old crop canaryseed prices have perked up a bit in a few locations, although bids generally remain thin and spotty. Demand has been fairly good, with exports on pace to hit our target for the year. Sales into Mexico and the U.S. are on track, while European purchases are well ahead of last year’s pace.
By: John Duvenaud, Agweek
WINNIPEG, Manitoba — Old crop canaryseed prices have perked up a bit in a few locations, although bids generally remain thin and spotty. Demand has been fairly good, with exports on pace to hit our target for the year. Sales into Mexico and the U.S. are on track, while European purchases are well ahead of last year’s pace.
Total demand for the year looks likely to come in above official available supplies. This makes it difficult to pin down the actual fundamentals of this market, although it does create the potential for supplies to tighten up later in the crop year.
Argentina just finished harvesting a crop that came in well above last year. This will provide some competition into Central and South America, including the key Mexican market.
Earlier in the winter, there had been some talk that low wheat prices might draw in a surge of new crop canaryseed acres, although this might no longer be the case after the run-up in wheat futures since the lows in late January. But, for smaller crops such as canaryseed, even a modest increase in seeded area can have a disproportionately large market impact. For this reason, 2014 acres will be watched closely.
Flax prices have continued to hold firm, and in some cases even increased, with bids as high as $14 per bushel or more for delivery into later spring and early summer. Exports have slowed a bit in recent months, although that is seasonally normal, even before this winter’s logistical challenges are factored in.
Exports to the end of February are running 70,000 metric tons ahead of last year, led by China and Europe. While the full year total will likely be the highest in several seasons, it will still be well short of what was typical five to 10 years ago before the Triffid issue reared its head.
China has been a bright spot in recent years, becoming a fairly consistent buyer right through the crop year. The U.S. has been lagging a bit, although it had a small crop last year, so we should see a pick-up in movement going forward as their supplies get tighter.
New-crop flax bids are generally $11 to $11.50 per bushel, with the inverse to old-crop prices reflecting the expectation for a sizeable increase in plantings in 2014. Estimates in the trade vary widely, although we suspect some of the most aggressive numbers from earlier this winter might have backed off a bit as prices from competing crops have recovered in recent weeks.
Canola prices came under pressure the week ending April 11 with increased producer selling and limited domestic and export demand. Pressure from the bean complex also spilled over into the canola market because of further soybean cancellations from China and improved export prospects from South America.
The Brazilian soybean harvest is more than 80 percent complete and the larger stocks are setting a negative tone to the world oilseed complex.
Conditions have moderately improved in Indonesia and Malaysia, enhancing palm oil production prospects,which also weighed on vegetable oil values.
The Canadian canola crush pace is slowly improving now that rail logistics have enhanced export capability for canola oil and meal. We expect this trend to continue, and, with favorable margins, the crush pace should stay strong until the end of the crop year.
Adverse weather in the U.S. major soybean growing regions has caused concern that old crop stocks might not be sufficient to hold the domestic crush pace until harvest. While U.S. soybean exports to China will ease, canola exports to China are expected to be above year-ago levels during the summer and early fall period. Given the larger supplies of canola, the canola market will function to encourage demand versus soybeans.
Western Canada has experienced below-normal temperatures and that will continue into late May.
Milling wheat prices in Western Canada continue to trade in a sideways range for both old- and new-crop delivery positions. Old-crop prices are expected to remain flat, given the fact that the commercial elevator system is basically plugged until new crop with limited delivery opportunities.
Many elevator companies are not posting bid prices for old crop positions for this reason. Rail logistics are improving, but it will take some time to alleviate the backlog, as many wheat rail shipments are six to eight weeks behind. The opening of Thunder Bay vessel movement has also been delayed because of extreme ice conditions. Shipments will likely be three to four weeks behind by the time vessel movement gets underway, resulting in additional backlogs in the country system.
For new crop, prices are focusing on upcoming world production. Much of the U.S. hard red winter wheat region continues to experience dryer conditions as the crop comes out of dormancy. As U.S. hard red winter wheat stocks will be extremely tight at the end of the crop year, the market is extremely sensitive to weather conditions. Germany, Eastern France, Ukraine and Russia have also experienced less than 50 percent of normal precipitation through March and early April.
The Canadian market is functioning to encourage demand relative to other major exporters and we expect to see a large year-over-year increase in Canadian wheat exports from May through December.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 1-800-567-5671 in Western Canada and North Dakota, all others call 204-942-1459, e-mail email@example.com or visit canadagrain.com.