WINNIPEG, Manitoba -- Oats markets have been dropping since harvest, but there's been a bit of firmness in the past few weeks.
The shortness that American millers were facing a year ago has long since been resolved. If anything, American millers are even better supplied than usual, as they collectively had their pants scared off and swore they'd never let themselves get into those circumstances again.
American millers are full. Despite the supposed lack of rail movement to the U.S., in fact oat trains are running smoothly. American millers were paying 80 cents over Duluth, Minn., a year ago. Today they're paying 10 cents more.
There's no shortage of oats. AgCanada places the carryover this July at 875,000 tons. That's tighter than a year earlier, but not especially tight.
It's easy to sell oats. They're moving. Emerson (Manitoba) Milling is at $3.15 per bushel for spot delivery, and buying. Southern Manitoba elevators are about $3.10, and buying. Green Prairie is at $2.52 delivered to Buchanan, Saskatchewan, and buying.
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New-crop miller oats bids were at a premium to old crop in Manitoba last month. Today, the off-combine bid is lower, but December delivery is still higher. Manitoba elevator new-crop bids are at a 5-cent premium to old crop. Green Prairie is at $2.60 for new crop, an 8-cent premium over spot.
The outlook for new-crop plantings is mixed. The Wild Oats survey had plantings up sharply. Seed dealers say sales are fine. On the other hand, Canadian Board of Trade December futures have lost 40 cents since last November and that will be a mild disincentive.
Canary markets weaken
Canary markets have weakened in the past few weeks, mostly on currency turmoil. As far as the Canadian dollar has dropped, the Mexican peso is worse. Mexican bids for canary are lower than those in Europe. Traders will tell you that doesn't happen often.
The end result is that canary bids have eased to 23 to 24 cents per pound freight-on-board farm Saskatchewan. Trade is smooth. Canary is trading at about its five-year average price. The seasonal trend is for prices to gradually drop from now until June.
The surging American dollar is temporary, mostly connected to American dollars invested around the world that are coming back to the U.S., as interest rates fall. In addition, Canadian exports have exceeded total supplies by 50,000 tons in the past two years.
Canola price sell-off
Canola prices experienced a sell-off in the past week. Throughout winter, commercial export and demand was driving the market higher; however, demand is starting to ease at higher levels.
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The drop in the futures market has caused the speculative funds to liquidate their long positions and take profits. Outside influences are weighing on canola, largely because of the weaker soy complex. Chinese demand for all oilseeds tends to slow in spring, which will weigh on canola and soybeans. At the end of March, the U.S. Department of Agriculture will release its seeding intentions report, and expectations are for a 3 to 5 percent increase in soybean acres. Slow export demand for U.S. soybeans and the potential for more acres could spill over into canola, resulting in further downside.
New-crop durum
Canadian 2015 durum acres could surge because of historically high prices this past crop year. In addition, the U.S. along with Europe will increase production. During the 2014 to '15 crop year, the market strengthenedlargely because of adverse quality in major exporting countries.
The probability of Canada, the U.S. and Europe all experiencing rain and snow during harvest are low. Many locations are showing new-crop prices at about $7 per bushel for No. 2 Canadian Western Amber Durum. This is a good starting point for new-crop sales. Given the potential surge in world production, durum could trade at a discount to hard red spring wheat. In Europe, new-crop durum trades at equivalent values to hard red spring wheat and it is a matter of time before this occurs in Canada.
New-crop malt barley
The Wild Oats acreage survey showed a 20 percent year-over-year increase in barley acres. Favorable returns per acre have caused farmers to increase production in hopes of malt quality production.
Domestic malting companies are showing prices at about $5.50 per bushel, which is nearly a $40 per metric-ton premium over the world market for new crop.
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 .
