Pea harvest under wayPea harvest is under way in the south, but not yet general. Few samples have made it to processors, but there doesn’t appear to be any reason to think quality will be an issue. Trade is just getting under way.
By: John Duvenaud, Agweek
WINNIPEG, Manitoba — Pea harvest is under way in the south, but not yet general. Few samples have made it to processors, but there doesn’t appear to be any reason to think quality will be an issue. Trade is just getting under way.
Most processors are still handling old crop, and these supplies will still be the bulk of exports for a few days yet.
Green peas bid somewhere between $8.25 and $9 per bushel. Given the cropping problems this spring and summer, the outlook is probably for prices to at least keep that level, or move higher. The hot temps in the past two weeks did not do the crop any good — the size of the individual peas might be a problem. Expect more smalls. Some good pea areas got 1- and 2-inch rains and that has probably not done the quality any favors.
Yellows trade around $6.50 per bushel delivered. Earlier this summer, yellow markets had a chance to move higher as the Indian monsoon was persistently below normal. Those rains keep improving, however, and Indian demand is easing.
Canary not the greatest
Canary markets are one of the few that are bullish these days. The 2014 canary crop didn’t get the greatest start and all that rain this summer was the last thing it needed. Seedings were up, according to Statistics Canada, to 280,000 acres, up 70,000 from last year, but still one of the smallest crops in years.
SaskAg rates the crop as 73 percent good to excellent, which is adequate. But the wetness and late-summer heat take a toll on development. Canary prices have been flat, or easing lower, since 2011 but appear to bottom in March and April at 19 cents. They’ve been working their way higher ever since.
There’s still a lot of stored canary in the country, but probably little of that is available at under 30 cents. Markets are normal for the time of year. There’s typically a bit of pressure just before harvest on bin cleaning, but the worst of that might already be behind us.
Mexican demand remains a wild card. They have been living off container shipments from a steadily shrinking number of exporters for almost a year now. There are still shipping constraints, and that country — our biggest buyer — has to be drawing down supplies.
Cattle on feed inventories are at seasonal lows, which has resulted in limited demand moving into harvest. At the same time, farmers in the major feeding regions are looking for off-farm movement, and this selling pressure has set a negative tone in the short term. Feed wheat prices are also weakening because of the large carryout of lower protein milling wheat. There are limited offshore homes for this quality wheat, and farmers are selling this wheat into the domestic market, making room for new-crop stocks. Feed wheat is trading at $180 per metric ton in the Lethbridge, Alberta, area. U.S. corn is trading into Southern Alberta at $212 per metric ton and the function of the corn market is to encourage demand. The domestic feed grains complex has significant supplies to absorb in the short term.
World feed barley prices are absorbing the Ukraine and Russian harvests. Black Sea origin barley is trading $215 per metric ton on a freight on board basis. Barley in Central Saskatchewan needs to be purchased at $120 (Canadian) per metric ton to compete into Middle East destinations in order to compete with Black Sea origin barley. We expect limited offshore movement in the first half of the crop year because of the extreme competition on the world market. It is also important to realize that West Coast fobbing capacity is booked up until January.
Elevator bids reflect the domestic feed market because of limited offshore movement. Domestic demand increases 30 percent by December, as more cattle move into feedlots.
World wheat prices continue to grind lower as all major exporters experience favorable growing conditions. In Western Canada, elevators will have limited space once again during harvest. This will continue through the first half of the crop year. The legislation imposed on the rail companies is basically in line with traditional movement during harvest. In fact, it was not uncommon for companies to exceed these levels in past years.
Prices in the elevator system are under $5.50 per bushel for No.1 Canadian western red spring wheat 13.5 protein and there is potential for further weakness. Early sample results from Western Canadian winter wheat harvest have fusarium levels from 10 to 30 percent. The spring wheat crop might have similar levels in certain regions of Western Canada that experienced precipitation during flowering. Keep in mind a large portion of the wheat crop was seeded late May or early June. Quality and protein is going to be quite variable this year and Western Canada needs an open frost-free fall. The large variation in quality and low prices could make it difficult for elevators to load unit trains of one specific grade.
Given the large supplies, the wheat market will remain relatively flat throughout the crop year.
Depending on the quality, there might be small premiums for No. 1 or No. 2 high-protein with low fusarium. U.S. mills accept a higher fusarium level than Europe, but limited rail movement to the U.S. in the first half of the crop year will limit the opportunities south of the border.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 1-800-567-5671, e-mail email@example.com or visit canadagrain.com.