Agricultural markets preparing for USDA reports
The U.S. Department of Agriculture is set to release some key reports this week. Not only is the monthly World Agricultural Supply and Demand Estimates report coming out, but planted area for winter wheat and canola for 2018, quarterly grain stocks of major grains and production statistics for crops harvested in the fall of 2017 will all be reported. Each of these reports has the potential to be a major price driver, and pre-report forecasts will set expectations and determine market reaction.
For example, it is expected that winter wheat planted area in the U.S. will continue to decline, potentially to the lowest level since data has been recorded on acreage. If the market showed flat area from a year ago, this would be a bearish piece of news for wheat prices. Look for the swath of USDA reports to give the markets plenty to trade on.
Wheat markets have bounced off of the lows, but prices have not been able to sustain a significant rally. The bulls came out briefly with a bout of frigid temperatures that likely did some damage to the winter wheat crop in the U.S. Russia also had some cold temperatures stress their crops. A return of warmer weather took the steam out of that rally. Additionally, global supplies loom over the market and provide perspective once any price support comes. There is just a lot of wheat in the world. FranceAgriMer reduced its expectations for wheat exports from their December estimate. Competition for exports is fierce, and is keeping a bearish tone in the market.
Durum prices were up modestly this week. There is no major fundamental change that has occurred for the durum market to drive up prices. Simply some added buying interest added to prices a bit. Overall, the large global wheat supply and lack of demand for durum is keeping a lid on the market.
Canola prices followed the U.S. soybean oil market this week. Prices have not changed significantly and traders are awaiting the USDA reports for further direction. Demand for canola from the U.S. has been strong and could tighten up canola stocks in the USDA's report as a result. However, with uncertainty surrounding the North American Free Trade Agreement, the strong trade could cool if any significant change to, or abandonment of, NAFTA occurs.
Peas and lentils
Pulse news has been scattered as field pea prices have been steady to start 2018. For lentils, reds have been pressured while greens have been firmer. The biggest global news is France's sale of field peas to China. Other than that, the market has been quiet.
Mustard seed exports out of Canada were lower in the first part of the 2017-18 marketing year, below last year and the five-year average. Statistics Canada announced that 38,100 metric tons were exported from August to November, which is 7 percent below last year and 9 percent below the recent average pace.