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Published June 30, 2014, 09:26 AM

Canary moving

WINNIPEG, Manitoba — Canary markets were dropping through the winter, but have been on the upswing since March, falling from 27 cents per pound at harvest to a late-winter low of 19 cents. They have been recovering gradually and now 22 to 22 ½ cents is available. Movement is normal. There doesn’t appear to be any difficulty in sourcing canary.

By: John Duvenaud, Agweek

WINNIPEG, Manitoba — Canary markets were dropping through the winter, but have been on the upswing since March, falling from 27 cents per pound at harvest to a late-winter low of 19 cents. They have been recovering gradually and now 22 to 22 ½ cents is available. Movement is normal. There doesn’t appear to be any difficulty in sourcing canary.

The Canadian canary export industry has gone through some tough times in the past few years, since Mexico imposed severe weed-seed count restrictions. Ten years ago, the Mexican market was serviced by several processor-exporters. It was a large market and the logistics weren’t a lot more difficult than shipping to the U.S.

The weed-seed issue has considerably narrowed the field of exporters willing to subject themselves to the potential liabilities involved in having a shipment rejected. Probably five exporters now handle most or all the Mexican business. These players have come to terms with the import requirements and have committed the resources to deal with any problems that arise. Most exporters, however, have abandoned Mexico as a potential customer.

Shipments by rail in hopper cars to Mexico are picking up after a slow winter. There were 23 cars shipped in May and another 12 so far in June. For most of the winter, Mexican distributors were relying on intermodal shipments and stored product. Probably 2,000 metric tons have been railed this spring. Movement is getting easier as the pressure eases on the Canadian transportation system.

Shipments to Europe and Brazil are normal.

AgCanada places the canary carryout at 5,000 metric tons but total on-farm supplies are probably tens of thousands of metric tons above that. On the other hand, most of those farm-held stocks are in tight hands. Little will be available at under 30 cents per pound.

Old-crop and new-crop canary prices are both around 22 to 22 ½ cents.

The new-crop acreage is still unknown, but it is likely to be at least somewhat above last year. Plantings will presumably be up, since most other crops were not exactly screaming to be planted, but yields will have trouble reaching last year’s bin-buster levels. The late planting probably pushed some land into canary.

Short-term price charts are moving higher and the possibility remains that the difficulty in getting cars to be shipped to Mexico will continue to ease.

Canola remains in consolidation

Canola prices continue to trade in a narrow range approaching July delivery. Most grain companies are now pricing off the November contract.

Old-crop demand is factored into the market limiting the nearby upside.

At the same time, fobbing capacity on the West Coast is booked up for the first half of the 2014 to ’15 crop year and major importers are focusing on January through March. Cash prices in the country reflect a 50-cents-per-bushel discount between July and September delivery.

The market is telling you not to store old crop canola into the new crop year. Looking forward, the commercial system is anticipating a surge in farmer selling during harvest. The January March futures spread reflects a $1-per-metric-ton carrying charge. Liquidate old-crop stocks.

If you haven’t sold 20 percent of your 2014 production, catch up on sales by selling now for the December through March timeframe.

We’ve seen a slight rally in the vegetable oil complex, while the meal component has come under pressure. This change in the crush margin structure has been supportive for canola but somewhat negative for beans. If the canola market experiences a rally because of adverse weather later in July, we will make our next recommendation to avoid selling during the harvest season. The burdensome carryout from 2013 to ’14, along with the upcoming crop will result in total supplies for 2014 to ’15 at 20 million metric tons, which is up 1.4 million metric tons from Aug. 1, 2013.

Durum prices percolating higher

Durum elevator bids in western Canada and North Dakota have been percolating higher in the past couple weeks. While conditions remain favorable in western Canada, excessive moisture in North Dakota might result in slightly lower acreage. Conditions in Europe are quite variable. France experienced dryer conditions earlier in spring, which hurt yield potential.

We now hear of some quality concerns as the harvest is under way. Italy experienced favorable growing conditions, but there are also some quality issues because of adverse weather late in the growing season and early harvest period. European prices were under pressure but have now stabilized and edged higher as harvest moves into the final stages. North African import demand will be larger than last year because of dryer conditions in Morocco and Algeria. The durum market is now starting to anticipate larger import demand from Europe and North Africa, which has resulted in stronger prices in western Canada.

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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