WINNIPEG, Manitoba -- Lentil markets are moving as well as can be expected, given our deplorable quality. Overseas end users have now received their initial 2014 crop shipments, and they are not impressed. Processors took the flack on this year's...
WINNIPEG, Manitoba -- Lentil markets are moving as well as can be expected, given our deplorable quality. Overseas end users have now received their initial 2014 crop shipments, and they are not impressed. Processors took the flack on this year's quality.
No. 2 Lairds range from 27 cents freight on board for wrinkled product, up to 29 cents delivered for less wrinkled ones
Carryovers are going to be tight by next summer. Don't be in a hurry to get rid of your greens, particularly Lairds. Estons will have a relatively higher carryover.
Reds are another story. The processing season started with most contracted product not meeting the No. 2 standard. Prices didn't escalate as much as greens. They were already strong. Reds trade around 27 to 28 cents per pound freight on board. Further gains are unlikely without some large-scale foreign cropping problem.
Mustard markets have already entered the pre-Christmas doldrums.
Prices are easing. Yellow was 34 cents at harvest. Now it's 31.5 to 32 cents per pound. Brown was 30 cents. Now it's 25 to 25.5. Oriental is 28.5 to 30 cents.
The 2014 crop was 179,000 metric tons, a large crop for Western Canada. Most will be moved within the crop year.
Demand is easing off mildly as the big Ukrainian crop is covering much of Europe's demand.
Farmers are generally reluctant sellers. Prices are well below contracted levels.
New crop bids are generally slightly easier than spot bids although there are rumors of 34- and 25-cent new-crop yellow bids.
Statistics Canada has canola production at 15.6 million metric tons on its final 2014 survey, up 10.5 percent from its September survey, but down from 2013's 18 million metric tons. Despite the larger production, we don't see a significant change to the fundamental structure, given current demand. The domestic crush pace to Dec. 3 was 2.4 million, up 150,000 metric tons from last year. Exports to Nov. 30 were 2.9 million metric tons, up 400,000 metric tons from last year. The market is encouraging demand. The carryout will be rather snug. We project ending stocks to be down sharply.
The main factor driving the soybean and canola markets is the tight meal situation in North America. Soy and canola meal prices continue to percolate higher, enhancing the crush margin structure. Canola oil demand is relatively the same every year, which has been supportive for the canola complex. Demand is also improving for soybeans, which will cause the carryout to drop. South American soybeans are experiencing favorable growing conditions, but the crop is far from finished. The market needs a large crop from South America to satisfy demand and is very sensitive to weather issues.
Statistics Canada has barley production at 7.1 million metric tons, marginally lower than the September survey and down sharply from the 2013 crop. Canadian barley fundamentals remain tight and project further upside in the market through the winter. Lethbridge, Alberta, feedlots were buying barley in the range of $198 per metric ton to $203 per metric ton in the past two weeks. Feedlot inventories are at seasonal highs, and the market encourages farmer selling. Feedlots are having to source barley from farther distances, given the smaller crop in Southern Alberta, and commercial truck availability remains tight. Crop year-to-date exports to Nov. 30 were 394,000 metric tons, up from 350,000 metric tons last year. This is surprising, given the smaller crop size. We are 40 percent sold on the 2014 crop. Use this latest strength to catch up to sales level. We continue to project upside to the range of $230 to $240 per metric ton delivered Lethbridge, Alberta, later in March.
The market needs to encourage acreage next spring, given the lower 2014 production.
Malt barley prices have edged higher this week reaching just above $6 per bushel in many locations. The Statistics Canada report confirms supplies of malt quality barley will be extremely tight in the latter half of the crop year.
All Canada nondurum wheat production was estimated at 24.1 million metric tons, down from 31 million in 2013. The nondurum carryout is expected to finish at 5.6 million metric tons, down from the 2013 to '14 carryout of 8 million metric tons, but just slightly higher than the 10-year average of 5.3 million metric tons. Canadian wheat stocks are not burdensome.
Minneapolis wheat futures have risen nearly $1 per bushel since the harvest lows, and we will advise our next sale early in 2015 to take advantage of this recent price strength. Export demand is coming in larger than earlier anticipated, supporting Canadian wheat prices.
Mild 2015 winter
Last year, my indicators were pointing to a cold winter. I called for temperatures in the bottom quintile. That's where they ended up.
This year the indicators point to a warm winter. I'm calling for temps to average 3.5 degrees Celsius above normal.
The single biggest influence on our climate is El Nino -- the periodic warming of the central Pacific. There's one in place now, according to the Australians, who have the best climate analysis in the world.
The Americans are still sitting on the fence, because the warm water is not moving as it normally does. The first indications, however, are here -- dryness in Australia and wetness in Argentina.
El Nino winters are typically warm and dry on the prairies. I've never seen a drought in Western Canada after an El Nino winter.
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.