Cold weather in U.S. stresses winter wheat
While most of the rest of the world has been trending warmer, the U.S. has been hit with colder-than-normal temperatures. Any glance at a weather map shows the incredibly bitter temperatures for the entire country. While this has its impact on the day-to-day lives of people dealing with snow, school closings and slippery roads, one must not forget the impact on crops. Of course, the primary growing season is not for months, but the winter wheat crop likely suffered some winterkill as a result of the extreme cold. Prior to the cold, weather had been generally warm. This has resulted in little snow cover for the crop, and exposure to the recent cold without snow left it vulnerable. Time will tell just how much damage was done, but for now, prices bumped modestly on the thought of lost crops.
Wheat markets have remained very tame through the Christmas and New Year's holidays. Traders have been on breaks, and little activity has driven the market. Prices took a step higher due to the recent bitter cold in the U.S. Extent of the damage to the crops is unknown at this time, so do not expect major ongoing support without a fresh wave of adverse weather. In the global picture, the European Commission reduced the soft wheat estimate for the European Union to 142 million metric tons from a previous 142.5 million metric tons. Even with the drop, supplies remain large and global stocks are burdensome. This will limit any significant rally potential.
Durum markets have not changed in the past few weeks. The market has been content to move sideways with little new information since harvest was completed.
Canola prices are watching the broader fats markets. Soybean oil found some support to start 2018. This has spilled over to canola, which has increased for the last couple of days. That being said, supplies are comfortable amid strong demand. The market will continue to follow soybean oil in the near term.
Peas and lentils
Export demand was weak to end 2017. Exports have lagged previous years out of Canada, with bulk loadings of field peas hitting a low in November not seen since 2000. Clearly, the lack of demand from India which changing policy is having an impact.