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Published June 23, 2014, 09:45 AM

A decent year for peas

WINNIPEG, Manitoba — It has been a decent marketing year for peas. Enough moved by container that Canadian exports were actually higher than a year ago and the high price of soymeal kept peas competitive in feed rations all winter.

By: John Duvenaud, Agweek

WINNIPEG, Manitoba — It has been a decent marketing year for peas. Enough moved by container that Canadian exports were actually higher than a year ago and the high price of soymeal kept peas competitive in feed rations all winter.

Prices for yellow peas started at around $6.50 per bushel last fall, slumped as low as $5.75 through the winter and have been trending higher since April. Price moves aren’t dramatic but they’re moving our way. The average price of yellow peas in Saskat-chewan is now at the nine-year average.

Seasonals suggest that prices will start to ease off in July and, this year, that slump is likely to be exaggerated by the large acreage and generally good condition of the new crop.

Green peas still bring $12 to $12.50 per bushel, and greens are even more vulnerable to a rapid sell-off once the new crop can be seen.

The trade estimates that perhaps 25 percent of old-crop peas are still on-farm.

Mustard markets strong

Canada, a major exporter, had large carryover stocks which depressed prices and, starting in 2011, farmers became reluctant to plant mustard and production was cut back. Now Canadian carryovers no longer exist. You can get 38 cents per pound freight on board for spot yellow mustard. New-crop bids are at 32 cents.

The size of new mustard crop plantings is still unknown but based on seed sales, will probably be 40 percent above the 2013 crop.

Spot bids remain strong because wet yards and delays in seeding hampered delivering. Processors want yellow mustard today, and are willing to pay for it.

Ukraine and the Czech Republic have emerged as serious yellow mustard producers and both countries seeded larger acreages this spring.

Brown mustard has benefited from an increase in demand in the past few years. Brown has become a mainstream mustard. Spot brown mustard is 34 cents per pound. New crop is 27 cents.

Oriental mustard used to be a cheap spicy vegetable oil shipped to Bangladesh.

Now it’s quality seedstock for wasabi, mostly exported to Japan. Oriental is losing its status as the cheap mustard. Spot Oriental is 27 cents per pound but new crop is at a premium — 28 cents.

With the new crop planted, and in good condition, mustard prices, except for Oriental, are headed to new crop levels.

Canola

Canola values have traded sideways. In the elevator system, cash prices for November delivery are about 50 cents per bushel lower than July delivery; farmers will not be rewarded for storing canola past September. We are projecting a canola carryout for 2013 to ’14 at 3.2 million metric tons. Farmers have a fair amount of canola to sell, some of it before the end of the crop year.

The upcoming crop continues to develop under favorable conditions, and the traders are anticipating a crop size of 17 million metric tons, slightly below 2013 production of 18 million metric tons. The Canadian system will be saturated with canola August through December causing basis levels to sharply deteriorate.

Soybean prices are expected to come under pressure late in the crop year, given the softer demand scenario. The export pace has slowed because of weak crush margins in China. Second, U.S. soybean production for 2014 is projected at 3.635 billion bushels, up from 3.289 billion bushels in 2013. Given the larger production, the U.S. Department of Agriculture is projecting a 2014 to ’15 U.S. soybean carryout of 330 million bushels, up from 125 million bushels in 2013 to ’14. There will be no shortage of soybeans in the upcoming crop year setting a negative tone to new crop oilseed prices. The bearish tone for soybeans will start to weigh more heavily on the canola market moving forward.

Milling wheat

The U.S. hard red winter wheat harvest is in the early stages and will start to pressure world wheat values in the next month. U.S. farmers sell approximately 50 percent of the winter wheat crop during the summer, and we do not want to be selling wheat when serious U.S supplies come on the world market.

Second, the U.S. and Canadian spring wheat crops have experienced optimal conditions and above-trend yields are expected.

Russian and Ukraine winter wheat export values continue to be the most competitive in the world, and we have seen Black Sea origin supplies trade into Central America. This is typically the backyard for Canadian and U.S. wheat.

The Canadian nondurum wheat carryout is estimated at 11 million metric tons, which is up from the 10-year average of 5 million metric tons. Therefore, Canadian farmers have a fair amount of wheat to move before the end of the crop year. The market is starting to anticipate these larger supplies in the elevator system, which will cause basis levels to erode sharply. High protein premiums are also deteriorating now as most major importers of higher protein red spring wheat have their requirements covered until new crop.

Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, call 1-800-567-5671 in Western Canada and North Dakota, 204-942-1459 for all others, or e-mail admin@canadagrain.com or visit canadagrain.com.

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