The monthly World Agricultural Supply and Demand Estimates Report was released this week. Huge changes were not made from August numbers, but the overall tone was one of generally well-supplied markets with a few exceptions. Corn, wheat and soybeans remain plentiful while other products like soybean oil and peas tightened. The market's reaction was much as expected, with support for prices with bullish changes to balance sheets and pressure in bearish markets (as pre-report estimates did not hold many significant changes, therefore traders were largely not surprised by the numbers).
Wheat markets have moved mostly sideways this week. The WASDE Report held no changes for the U.S. wheat balance sheet, keeping supplies plentiful into the 2017-18 crop year. The world wheat ending stock estimate did fall by 1.7 million metric tons, however.
Despite increases in output from Russia, revisions to Australian carry-out took supplies down (though global stocks are still comfortable). Spring wheat harvest in the U.S. is nearly done, with the USDA reporting 95 percent completion compared to 87 percent for the five-year average. Winter wheat planting is under way, with 5 percent done compared to 6 percent for the five-year average.
Durum prices have held steady in the last week. Harvest progress in North Dakota was reported at 87 percent completion. Saskatchewan reported 81 percent harvest completion for durum, and dry conditions have allowed farmers to progress significantly in the last week. The U.S. Department of Agriculture balance sheet shows a carry-out of 108 million bushels, from 126 million bushels in the 2016-17 crop year.
Canola prices have generally been weak with traders citing fast harvest progress pressure as the main catalyst for the decline. Saskatchewan's progress for harvest is ahead of normal at 50 percent completion and conditions have generally been favorable for farmers to get work done. Some rains are expected in pockets in the coming week. The interesting development for the canola market was that despite Statistics Canada reducing their expected production total to 18.2 million metric tons, the USDA only reduced the crop to 19.9 million metric tons.
Peas & Lentils
In the U.S., lower planted area and poor weather through the summer in the Northern Plains are resulting in a big drop in pulse production. The USDA showed a drop to 697,000 metric tons of field peas (a 45 percent dip from a year ago).
Planted area is down 17 percent and yields are likely to hit their lowest level since 1996. Lentil harvest is expected to fall 41 percent to 338,000 metric tons, even with a 19 percent increase in planted area. In Canada, residual lentil supplies are higher than expected, as pre-report estimates for the Statistics Canada data averaged 283,000 metric tons versus the actual 405,000 metric tons.
Harvest progress of mustard seed in Canada is speeding along. Fifty-eight percent of the crop was reported complete compared to the five-year pace of 41 percent and last year's slow 25 percent. Based on expected yields and total area, this suggests roughly 167,000 metric tons are available in Canada with expected export demand at 120,000 metric tons.
U.S. barley harvest is basically done, with the USDA showing 96 percent completion in its weekly crop progress report. The USDA made no changes to the U.S. barley balance sheet in the WASDE Report. Yield held steady at 72.1 bushels per acre and new crop ending stocks are expected to hit 70 million bushels (from 108 million in the 2016-2017 crop year).