WINNIPEG, Manitoba -- Yellows and browns are a bit weaker than a year ago, while Oriental is firmer. All mustard prices remain well above the lows of 2010 and 2011 when big carryover stocks weighed on markets.
The big carryovers were cleaned up by 2012 with an abnormally small western Canadian crop -- 119,000 metric tons. That drew carryovers down, and, with export demand constant, we're now generally at just-in-time inventory levels in farmers' bins.
Oriental used to be flogged off as cheap, spicy vegetable oil to Bangledesh.
An exporter would pick up all the cheap Oriental and arrange a vessel, but Oriental has been too expensive. Now most goes to Japan as a manufacturing input for wasabi and other specialty food products. Oriental trades around 29 to 30 cents.
Brown mostly goes to Europe where it competes with other origins and trades around 26 to 30 cents.
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Yellow mustard has a yield disadvantage and generally sells at a premium.
This is hot dog mustard with a big market here in North America. Yellow trades around 31.5 cents per pound, with 33 available for deferred delivery.
Mustard plantings were up by 20 percent this year and production rose from 155,000 metric tons last year to 179,000 this year. The carry-in was tiny, exports are steady and we're going to be tight on supplies before the 2015 crop comes in.
The 2014 crop was decent quality, not as good as last year, but satisfactory.
Soybeans
A record American soybean crop is 70 percent harvested. South America is planting an even bigger crop than last year. The American carryover next fall is projected at a record 450 million bushels.
The other side of the story is that Chicago Board of Trade November futures have rallied a dollar in October and meal rallied $100 per ton in the same period. For the first time in years meal is dragging soybeans higher.
It's not intuitive, but it is explainable. The American pipeline was empty when harvest started. The official carryover was a miniscule 92 million bushels. American buyers were sitting back thinking all they needed to do was open their doors to get all the deliveries they could handle. They are still only at $8.50 per bushel. That's a hard sell for farmers who had been getting $14 for the last of their old crop.
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Canadian prices have gone up by about $1 per bushel in the past month. Delmar Commodities is at $9.46 per bushel, Manitoba elevators are around $9.75.
Canola edges higher
Cash canola prices edged higher, as strong export and domestic demand continue to tighten supplies in the commercial system. The November January canola futures spread has now moved to an inverse reflecting stronger basis levels in the country system.
The crop year domestic crush for the week ending Oct. 22 was 1.63 million metric tons, up 250,000 metric tons from last year. Exports are also sharply higher at 1.938 million metric tons, up 500,000 from 2013 to '14. Stronger demand is keeping the market well supported at the current levels and with the tighter fundamental structure for the 2014 to '15 crop year, we project canola prices to percolate higher over winter.
Soybean harvest is now 70 percent complete and the market appears to have absorbed the record harvest pressure easily. U.S. soybean export sales are running sharply higher than last year and stronger meal values have enhanced the domestic soybean crush margins. It appears the lows have been made in the soybean complex and this has allowed canola some breathing room moving forward. Brazil's state of Matto Gosso is expected to receive timely rains, but the soybean market appears to be supported from uncertainty, given the dryer conditions during the planting season.
BarleyEditor'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 admin@canadagrain.com or visit canadagrain.com.
