Soybeans difficult to moveSoybeans are one of the crops that have suddenly become just another commercial product. Delmar commodities in Winkler, Manitoba, has been buying all winter for its crush, but elevators went no-bid in January and only re-opened their doors in April.
By: John Duvenaud, Agweek
WINNIPEG, Manitoba — Soybeans are one of the crops that have suddenly become just another commercial product.
Delmar commodities in Winkler, Manitoba, has been buying all winter for its crush, but elevators went no-bid in January and only re-opened their doors in April.
Soybeans have been difficult to move all winter. Railroads in Canada can’t count soybean shipments as part of their grain movement so, once grain movement became a government concern, western Canadian elevators were stuck with whatever inventory they had already bought.
Soybean movement has opened up because soybeans are a valuable commodity and, more important, central North America is short-supplied. We’re competing with imported Brazilian soybeans so Canadian soybeans suddenly have a major freight advantage.
Elevators are paying $13.70 to $14 per bushel for soybeans. Delmar is at $13.80. Doors are open.
Soybean markets are in transition from super-tight supplies to a probable glut this fall. The American crop is 87 percent planted, well ahead of average, acreage is still unknown but certain to be well above last year, and the first crop rating of the year just came in at 74 percent good to excellent, also well above average.
At some point, the trade is going to stop buying old-crop soybeans because, by the time they get them moved, they might be selling them into a new-crop pricing regime. Chicago Board of Trade July soybeans are $14.68; November is $12.30. Delmar is $13.80 spot; $11.10 new crop.
Oats also were hard to move this past winter. The bottom of the market was in April. Prices rose then grew through May. Now, Saskatchewan elevator oat bids are up to the five-year and nine-year averages.
There is a window right now to make oat sales before farmers start to clean out bins for new crop. There are still a lot of oats in Canada. AgCanada puts the carryover in July at 1.35 million metric tons, far above the 500,000 a year ago. Come July, expect a slug of offerings to haul in oats. The system could easily become congested again.
Manitoba elevators are $3.25. Few oats are being delivered at the moment.
Feed barley values in southern Alberta have been under pressure in the past two weeks. Feedlots in the Lethbridge area are currently buying barley at $195 per metric ton delivered, which is down from the highs of $220 per metric ton earlier in May. Farmers have been aggressive sellers after seeding. Second, truck logistics have improved, allowing barley from Eastern Saskatchewan and Manitoba to flow into the major feeding regions.
Demand is eroding as cattle on feed inventories decline into the summer months. Weakness in the corn complex has also set a negative tone for the overall feed grain complex. We are still projecting a carryout of 2.1 million metric tons so there is a fair amount of barley that needs to be sold before the end of the crop year.
Domestic malting companies have the bulk of their requirements covered for the first half of the 2014 to ’15 crop year. Earlier in winter we made our first recommendation to ensure movement at harvest. We now find domestic malting companies showing bids in the range of $5.50 to $6 per bushel for February through July 2015. These prices are near record highs, which shows the upside is limited. Second, the malt premium over feed barley is also quite large. If favorable crop conditions materialize, this malt premium over feed will erode with time. Export values are currently at a discount to the domestic market with grain companies showing bids at $5 per bushel for October through December delivery. Domestic demand is filling up and, once this demand is saturated, farmers will be forced to sell into export channels.
Durum prices in the elevator system have been percolating higher in the past month because of stronger export demand. Slower farmer selling and improved logistics have caused commercial stocks of durum to drop to 435,000 metric tons. This is quite snug, given the export projections for the remainder of the crop year. Keep in mind we continue to forecast a Canadian durum carryout at 2 million metric tons, so there are larger stocks overhanging the market that need to move because of the end of the crop year.
North African harvests are in full swing, which has tempered demand from these major importing countries. French and Spanish export values have declined, so Canadian durum is now uncompetitive into Europe.
Wild Oats recommends that producers sell the final 20 percent of the 2013 crop because we feel the market will be rather sluggish in the next couple months. Growing conditions are quite favorable and farmers will be more active sellers once the upcoming crop is more certain.
Editor's note: Duvenaud publishes the Wild Oats Grain Market Advisory. For a free copy, call 800-567-5671 in North Dakota and western Canada. All others call 204-942-1459.