Minneapolis wheat futures rising
The spring wheat market has been on fire of late. Poor weather for the last month has hit the Northern Plains in the U.S. and into Canada, leaving spring wheat in desperate need of some rain. The crop condition reports have shown lower ratings from week to week, and current forecasts for the next six to ten days show a continuation of hot and dry weather. While sellers are seeing higher market prices, the lack of quality, high-protein wheat from last crop year coupled with this likely smaller crop will lead to tightness ahead.
Wheat prices have run away to the upside in the Minneapolis market. Prices for the December contract have rallied 33 percent from the low in May. As previously mentioned, the weather has been too hot and dry, and the crop is suffering. The USDA reported that the U.S. spring wheat crop is just 40 percent good/excellent and 28 percent poor/very poor. This is vastly different from last year's amazing crop that was rated 72 percent good/excellent and five percent poor/very poor, in the same week. Further south, the winter wheat harvest is progressing on schedule. 41 percent of the crop has been harvested compared to 39 percent for the five-year average.
The durum market continues to rise off of the lows, finally breaking away from the incredible pressure that had kept the market quiet for over a year. Crop conditions are falling — and North Dakota's crop is in trouble. The USDA showed just 24 percent of the crop rated good, and zero percent excellent. Rain is desperately needed, and there is not any expected into mid-July.
Canadian farmers planted two percent more than intended in the spring, with total area reaching 22.84 million acres. The market was expecting area to total roughly 22.2 million acres, so the Statistics Canada report was slightly bearish. Add this to the improvement in growing conditions for most of the crop, and the market has been on the defensive.
Yes, the soybean oil market in Chicago has been supported in the last week, but long term fundamentals point towards a good crop. On the flip side, canola demand is very strong and old crop supplies are dwindling. The market is banking on a large crop this year.
Peas & Lentils
The market was caught off guard by the actual planting results in Canada compared to intentions from the spring. Farmers planted just one percent more area to pulses and other specialty crops than intended. The biggest and most notable jump came from soybean area.
On the demand side, exports are up big from a year ago (no surprise given larger supplies). The Canadian Grains Commission showed 83.9 thousand metric tons of lentils loaded for export in May compared to 10.3 thousand metric tons in May 2016. Total exports loaded to date for the 2016-17 marketing year is 784.6 thousand metric tons versus 601.4 thousand metric tons last year.
Mustard seed exports remain slow, with low volumes reported to the Canadian Grains Commission. Just 200 metric tons of bulk mustard seed was cleared from June 12 to June 18. Exports reported a to-date total of 19.8 thousand metric tons compared to 20.3 thousand metric tons in the same time a year ago.
The U.S. barley crop is facing some tough growing conditions as well. The crop is now rated 60 percent good/excellent compared to 64 percent a week ago and 75 percent last year.