WINNIPEG, Manitoba -- Soybeans in Manitoba are flat, trading about where they were in January.
Buyers price off Chicago Board of Trade futures, and they had a minor run in February so there were slightly better prices available for a while. Delmar International Inc. is paying 30 cents over May, putting it at $10.10 the morning of March 24, while elevators are about $9.80 per bushel.
New crop trades at a 30 to 45 cent discount to old crop.
Fundamentals for soybean markets are not the greatest. American soybean stocks are at their highest level in seven years. American exports are falling as importers move to cheaper South American supplies.
American exports were at a record high last fall but, with the availability of South American product, they are now well below the year-earlier pace.
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Soybean stocks are building around the world. In the past 10 years, world production increased from 200 million metric tons to 290 million. Usage increased to 280 million. Those extra soybeans are bigger ending stocks. Global stocks have hit record highs in five of the past six seasons.
New crop is, if possible, even more negative. The current price relationship with corn suggests American plantings will increase this spring.
Subsoil moisture in the Midwest and South is excellent.
Wild Oats is 80 percent priced on old crop. Sell the first 20 percent increment of new crop while the jury is still out on growing season weather.
Mustard quiet
There's not much action in mustard markets with the exception of yellow.
A few exporters are finding themselves having trouble sourcing high-quality yellow already committed to end-users. Yellow has been trading at about 32 cents per pound most of the winter but Viterra is buying at 36 cents now, if you also contract new crop.
Brown has been selling at 24 to 25 cents and new-crop contracts are available at 27 cents, on a full-year basis. The market is telling you it's OK to simply hold your brown.
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Lots of farmers are doing just that. It's hard to buy brown under 30 cents. There might be lots out there, but it is not coming to town.
Mustard had traditionally been largely forward contracted before seeding.
Canola prices soften
Canola prices have failed to make fresh highs in the past couple weeks and are starting to feel vulnerable. The May to July canola futures spread is weakening, reflecting that commercial companies have better coverage for their nearby requirement. Basis levels are softening in the elevator system and there is potential for a slower export pace for the remainder of the crop year.
Canola prices had divorced from the bean complex, but we are now seeing canola move more in line with world vegetable oil prices. The Canadian dollar has stabilized at the lower levels and if the exchange rate strengthens from these lows, canola will come under pressure. We are currently 80 percent sold on old-crop canola.
New-crop prices have also eased in the past couple weeks. Favorable returns compared with other crops have analysts now increasing their acreage estimates. U.S. soybean acres also have potential to experience a year-over-year increase of 3 to 5 percent. This will weigh on soy and canola oil for the fall positions. It is still early and weather will play a major factor this year, given the current spring conditions in the U.S. and Canada.
Feed wheat and barley
Lethbridge, Alberta, area feedlots were buying feed barley in the range of $205 to $207 per metric ton. Central Saskatchewan elevator prices are in the range of $140 to $150 per metric ton. The barley market has been relatively flat over the winter, but there appears to be a firmer tone as we move into road ban season and spring seeding. Cattle-on-feed inventories are at seasonal highs and will start to decline in May. Export business has been quiet; European feed barley continues to saturate the world market and has also traded to Canada's main customer Japan.
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The Southern Alberta market is currently trading from $200 per metric ton to $205 per metric ton while central Saskatchewan elevator bids are averaging $150 per metric ton. The feed wheat market is expected to remain relatively flat because of the larger supplies in Alberta and eastern Saskatchewan.
Milling wheat
The market is now starting to focus on upcoming production in the Northern Hemisphere.
U.S. hard red winter wheat is leading the charge higher because of drier conditions and limited rain in the forecast.
North Dakota and Western Canada are also experiencing above normal temperatures and below normal precipitation in many areas. Basis levels are firm in Western Canada as companies try to encourage deliveries to fill rail car capacity legislated by the federal government.
John Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, call 1-800-567-5671, email admin@canadagrain.com or visit http://canadagrain.com .
