Bearish reaction to USDA's report
WINNIPEG, Manitoba -- The U.S. Department of Agriculture reported that old-crop soybean stocks were above expectations and new-crop plantings well above. Most markets were already trending lower and this trigger unleashed a flood of fund shortsel...
WINNIPEG, Manitoba -- The U.S. Department of Agriculture reported that old-crop soybean stocks were above expectations and new-crop plantings well above. Most markets were already trending lower and this trigger unleashed a flood of fund shortselling. Chicago Board of Trade November soybeans lost 75 cents per bushel in June 30 trading.
Bigger US stocks, plantings
USDA reported 405 million bushels of soybeans, 27 million above expectations.
Corn, likewise, had stocks 100 million above expectations. Wheat was marginally lower.
Corn plantings were about as expected but soybean plantings were dramatically higher -- by 2.7 million acres. Spring wheat plantings were 700,000 acres above the March estimate. Durum plantings, however, were 300,000 acres lower than expected.
Western Canadian seedings as expected
Canola acres at 20.2 million, using a trend yield of 34 bushels per acre, will produce 15.4 million metric tons, compared with 2013's 18 million. The market will be sensitive to yield potential. If yields turn out to be only 30 bushels per acre, production drops to 13.6 million metric tons and the 2014 to '15 carryout has potential to be tight at 1.3 million metric tons. On the other hand, if yields are closer to last year, at 38 bushels per acre, production will be 17.2 million metric tons, but the carryout surges to extremely burdensome levels. The 2013 yield was 40 bushels per acre, but in 2012, yields were only 29. A yield above trend will cause canola prices to drop under $8 per bushel in the country. There is potential for an extremely volatile market in the next month as the crop moves through flowering. Conditions appear similar to last year so new-crop prices have limited upside and are expected to trend lower. The June 30 USDA report showed soybean stocks larger than expected. Supplies will be sufficient until new crop. Weakness in the bean complex will spill over into canola. Be ready to pull the trigger on the next 20 percent increment of 2014 crop in the next couple weeks.
Barley acres, down 14 percent from last year, using trend yields, will produce 8 million metric tons, compared with 10.2 in 2013. The carryout for 2014 to '15 is 1.2 million metric tons, down from 2 million metric tons. Barley supplies in the upcoming crop year will be snug but the tighter supply will only start to influence the market later in winter, as a result of the larger carry-in.
Feedlots in Southern Alberta are near $4 per bushel ($183 per metric ton) delivered for September delivery, which is sharply higher than buying interest on the world market.
Milling wheat protein premiums strengthen
High protein milling wheat stocks in Western Canada are extremely tight. Companies are paying as much as 75 cents per bushel for immediate delivery of Canadian western red spring wheat 13.5 percent and higher.
Growing conditions are similar to last year and high-protein wheat stocks will continue to be snug for 2014 to '15.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, call 1-800-567-5671 in Western Canada and North Dakota, 204-942-1459 for all others, or e-mail firstname.lastname@example.org or visit canadagrain.com.