Markets transitioning to winter drivers
Harvest is all but done for most major crops. Corn and soybeans in the U.S. are still being harvested, and a surprise there could spill over to other markets, but this is not likely. Supplies are mostly known. Final crop production data will come out in the months ahead, but the market's attention is shifting. Export demand, policy and plans for 2018 will be the story.
Markets are generally well supplied and have been pressured, so for most, the path of least resistance is upward. Any major rally will be difficult to sustain until a major fundamental shift occurs. But there just is not much room on the downside, and market participants are looking for a reason to climb.
Wheat markets could not be any less volatile. Spring wheat futures have been moving sideways for the last several weeks, with prices comfortably trading in a 20 cent range for nearly all of October. With harvest wrapped up in Canada and the U.S., there just has not been much to be excited about. Supplies are comfortable, even with the lower acreage totals and bad weather in the Northern Plains of the U.S. and southern growing regions of Canada. Global supplies are large, and thus export demand has not been that great. Currency moves are becoming more of a story from day-to-day as drivers of export sales. One potential support will be weather in Australia, which could be unfavorably dry and impact production and therefore supplies. If their crop is smaller, this could provide the U.S. and Canada an opportunity to ship to Asia (if Russia will slow their exports).
Durum prices were lowered modestly this week. The market has been pressured, as harvest is now done and the tumultuous summer weather rally is in the rear view. Saskatchewan released its (likely) last crop report of the season, showing durum harvest is 100 percent complete. According to the report, "Harvest weather was favorable for much of the fall, allowing producers to pull off well-above-average crop quality." In terms of weather, "field conditions remained dry for the majority of the province, producers had fewer rain delays than in previous years and were able to take most crops off in relatively good condition." Wheat prices overall have been flat, keeping pressure on grains. Export sales were lower than expected this week, showing softer demand that allowed for prices to dip.
Canola prices have firmed with broader oil markets. The soybean oil market in the U.S. has rallied with the Environmental Protection Agency announcement that mandates for the Renewable Fuels Standard would not be reduced for 2018 (and could actually be increased). Additionally, potential demand from China is supportive for canola. Saskatchewan's crop report showed expected yield for their canola crop at 34 bushels per acre. Northern Alberta is the only area that still has canola to harvest. Yields are expected to hit the 10-year average.
Peas and lentils
Pulse markets have been soft in recent weeks. The post-harvest market has resulted in plenty of supply available in Canada and the U.S., and Indian demand has not been particularly strong.
Flow of mustard seed remains slow. Exports through terminals reporting to the Canadian Grains Commission is roughly on pace with last year.