For those following the wheat market wire, Egypt has been a tough topic to avoid of late. From farms in the Dakotas or the Canadian prairies, it can sometimes be difficult to see how Egypt can make such a difference to the wheat markets.
But due to a government food assistance program, Egypt is the world's top buyer of wheat year after year. So when there is a disruption in the buying of such a market force, the market takes notice.
Recently, a couple shipments of wheat have been found to contain poppy seeds (one shipment from Romania and another from France). These seeds have been deemed toxic, and the shipments have been set aside as governments and lawyers try to resolve the issue. The overall size of these shipments is not the concern. The concern is the fact that the Egyptian General Authority of Supply Commodities is yet again halting imports on somewhat questionable quality standards.
Recall the ergot fungus story from a year ago, where the GASC repeatedly stopped shipments of wheat with any presence of ergot despite the global standard that allows a small amount. These blurry and changing standards led many exporters to stop doing business with Egypt for a time, until major problems were resolved internally and assurances were made that business would continue as normal. The market may be facing a similar situation if this poppy seed quality issue continues to restrict business for exporters.
Wheat markets have been mostly flat this week. There has not been much new information to drive major volatility. In the U.S., spring wheat harvest is done, and earlier than usual. The poor crop allowed farmers to move quickly through their fields as many acres were abandoned. Winter wheat planting is progressing on schedule, with the U.S. Department of Agriculture showing 13 percent complete versus 15 percent for the five-year average. Data from Statistics Canada showed total wheat output is expected at 27.1 million metric tons (a 14.5 percent decline from 2016). Canadian spring wheat production did not see as big of a drop, totaling 20.1 million metric tons, a 1.8 percent fall from 2016.
There has been little price action for the durum market. Minneapolis prices have held steady for the last few weeks. Harvest efforts are coming to a close, with the USDA reporting 95 percent complete in North Dakota. This is well ahead of last year's 84 percent and the five-year average pace of 77 percent. The dry conditions throughout the summer have made harvest go quickly.
In Canada, production is expected to total just 4.3 million metric tons, a 44.6 percent drop from the previous year. Dry weather in the southern prairies led to a big drop in yield to 31 bushels per acre (36.5 percent below a year ago).
Canola prices have been fairly firm compared to the rival soybean oil market. Prices are lower than a week ago, however, on expectations of a better crop than initially thought by Statistics Canada. Statistics Canada is expecting canola output to reach 19.7 million metric tons. This is a very modest increase from 2016, even though planted area was up 13.8 percent.
Peas & Lentils
There has not been much activity for the pulse market in the last week.
Agriculture Canada has updated its production forecast for mustard seed, including Statistics Canada's output estimates. Production could reach 130,000 metric tons on 164,000 hectares, according to Agriculture Canada. This is a big drop from last year's 236,000 metric tons. Exports are expected to hit 125,000 metric tons in 2017-18 from 124,000 metric tons in the 2016-17 marketing year.
U.S. barley harvest is finished for all intents and purposes. The October Supply & Demand report from the USDA will provide an updated look at yield and the overall production impact now that harvest is known.