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Published May 12, 2014, 10:00 AM

Mustard market quiet

Mustard is moving fine, and at decent prices. Trade, at the moment, is fairly slow with little push from farmers. Most of the mustard farmers wanted to move this winter was moved.

By: John Duvenaud, Agweek

WINNIPEG, Manitoba — Mustard is moving fine, and at decent prices. Trade, at the moment, is fairly slow with little push from farmers. Most of the mustard farmers wanted to move this winter was moved.

There seems to be adequate supplies of yellow in the country. Nevertheless, Canadian mustard stocks continue to tighten. AgCanada places the carryout this July at 25,000 metric tons, down from 30,000 last July and 36,000 two years ago.

Spot yellow is trading at 35 to 36 cents per pound and it’s fairly easy to find buyers. Spot brown is 34 to 36 cents. Spot Oriental is 25 to 28 cents.

The new crop should be big. Statistics Canada has plantings up 32 percent, to 480,000 acres. The trade thinks, based on seed sales, that plantings could be even higher. This spring could see a record demand for mustard seed.

A crop of this size could be bearish. New-crop contracts are readily available. Yellow trades at 31 to 34 cents, with lower prices for off-combine delivery and higher for deferred. New-crop brown is 28 to 30 cents. New-crop Oriental is 28 to 30 cents. New-crop bids are slowly easing.

Processors generally like to deal with brown off the combine because there are immediate markets in Europe. Yellow moves year round, but with more export action after Christmas.

Ukraine is a wild card. It is the second-largest mustard exporter, after Canada. The political issues might not matter to farmers, or they might cause some input supply disruptions.

Lentils moving well

Statistics Canada says Canadian lentil stocks are down 40 percent from last year, well under the year before. Whatever the transportation problems with wheat, there isn’t a similar concern with lentils. Of course, many lentils are shipped via container. Regardless, the supply of lentils is healthy from a farmer’s perspective.

Prices are stable and supported by weather problems in India. No. 2 Lairds trade at 17 cents per pound freight on board and 18 cents delivered. Estons are 17 cents delivered. Reds are 25 cents delivered. Most plants are booking for June to July delivery, although some might take lentils immediately.

The new crop is going to be huge. Statistics Canada suggests plantings will increase 20 percent from last year, to 2.8 million acres. Reds have been trading at a 2-to-5-cent premium over greens for some time. Expect a slug of red plantings. The trade estimates 2.2 million acres of reds. Canada is only one of many global red lentil producers, so that’s not all that daunting. The flip side is green production. It might be short and, if so, there’s plenty of room on the upside.

Canola: Enhanced demand

Stocks of canola will remain burdensome into the summer, but demand appears to be strengthening late in the crop year. Canadian canola crop year-to-date exports for the week ending April 27 were 6 million metric tons, which is slightly above last year’s pace of 5.8 million. At the same time, the crop year-to-date crush pace as of April 30 was 5.1 million metric tons, compared with 5.3 million in 2012 to ’13.

Improved rail logistics for canola seed and products have enhanced demand, keeping the market well supported.

Another factor to consider is the July-November futures spread, which has narrowed from a $16 carry earlier in April down to $4 in early May. The narrowing of the new- and old-crop spread tells farmers not to store canola into the new-crop year and also suggests that commercial traders feel demand is improving.

Larger canola stocks will continue to temper the upside in the canola market for the remainder of the crop year. Meal values, which have been leading the oilseed complex, appear to be topping out, while world vegetable oil prices have softened. Canola is priced competitively on the world market, but the Canadian system has abundant stocks to move in the next four months.

Milling wheat prices percolate higher

Dryer conditions continue to dominate the U.S. hard red winter wheat growing region, which has been an underlying factor driving all wheat futures markets higher. It appears that yields will come in lower than earlier anticipated. This lower production is coming on the heels of a historically tight carryout for both U.S. soft red and hard red winter wheat.

The second region we are closely watching is Europe, where Germany and Eastern France have also experienced dryer conditions. Rains are forecasted in the next week in this region, but we estimate that yields will come in slightly below average, given conditions to date.

Finally, escalation of political uncertainty in the Black Sea region continues to cause export uncertainty for the upcoming crop year. This is a wild card in the wheat market, which might have a larger effect on the world market longer term.

In Western Canada, rail logistics have improved, causing the basis to narrow and the futures market has rallied $2 per bushel from the lows.

For new crop, elevator companies have narrowed the basis by 50 cents per bushel for No. 1 Canadian Western red spring wheat to 13.5.

Duvenaud publishes the Wild Oats Grain market Advisory. For a free copy, call (800) 567-5671 in Western Canada and North Dakota. All others call 204-942--1459.

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