U.S. and Cuba trade relationship rolled back
The Trump administration has reduced U.S. involvement with Cuba following former President Obama's loosening of restrictions. The U.S. Grains Council has objected to this move. This group has worked with Cuba for a long time and has established a solid trade relationship.
Roughly 10 million bushels of corn has been traded with Cuba through April of the current crop year. The hope of this organization is to continue to develop the farm economy and ensure a solid trade relationship. Total corn demand is roughly 34 million bushels, and the U.S. Grains Council would hope to capture all of that demand (which would make Cuba the 11th biggest buyer of U.S. corn).
The organization is unhappy with the move by Trump and is proceeding with a trip to Cuba to continue its relationship and hopes to keep demand growth in the coming years.
Wheat markets continue to climb. Conditions have not improved in the Northern Plains in the U.S., and spring wheat crop conditions keep deteriorating. The U.S. Department of Agriculture showed another decline in ratings, with just 41 percent of the crop rated good/excellent from 45 percent a week ago and 76 percent a year ago. Less than a month ago, over 60 percent of the crop was good/excellent. Look for ongoing support, especially since supplies of quality, high-protein wheat were already small after last year's crop.
The durum market has increased from the previous week. While the market has only rallied about $1 off the lows, from a historical perspective this increase is not very large. Prices are rising on concerns about the current crop that is dealing with dry conditions. However, supplies are quite large from the 2016 crop.
The canola market is finding pressure from all angles. From a fundamental standpoint, larger planted area is known. Updated numbers from the Canadian government will be released soon, but even if area drops some from spring expectations, area will be large. Additionally, weather conditions in Canada have improved immensely for growing. In May, it was quite dry. This raised some concerns for crop development, but allowed for rapid planting in many areas.
In recent weeks, plenty of rain has come to help the crop grow, alleviating fears of crop issues in the early going. Adding to pressure is the decline of the soybean oil market, as well as European rapeseed prices.
Peas and Lentils
There's big news for the global pulse market coming from India. Recall the Indian government promising to double farmer income over the next five years, which would decrease dependence on imports and require farm price supports.
Details of these supports (minimum support prices) have been unclear and mostly secret. Protests rose up by farmers due to weak prices and rising input costs. In response, several states have released details to prove to upset farmers that the government is serious about improving income for them. The major point of this, is that the minimum support prices for the coming year will increase from 7 percent to 8 percent. Additionally, monsoon irregularities led to a slower pace for pulse plantings in India during the last week.
Total planted area for the kharif season is at 222,000 hectares compared to 363,000 hectares a year ago. However, July will hold more planting progress, so though area seems significantly lower now, it may get closer as the weeks progress.
The Canadian government's monthly review of the mustard seed situation showed that production could hit 150,000 metric tons. This would be a significant drop from the 2016 crop that totaled 234,000 metric tons, but area is also significantly lower this year. However, export demand could surpass a year ago at 125,000 metric tons compared to 117,000 metric tons in the 2016-17 crop year. All of these estimates are forecasts, and not based on farmer surveys.
The U.S. barley crop is heading, though about a week behind "normal." The USDA reported 10 percent of the crop headed compared to 19 percent for the five-year average. Rains in the spring that had delayed planting, and weather woes since in some areas are causing the lag.
Conditions of the crop also fell further as dryness in the Northern Plains has persisted. The weekly ratings show 64 percent of the crop rated good/excellent compared to 72 percent a week ago and 77 percent last year.