WINNIPEG, Manitoba -- Greens have been tight all year, but yellows also are starting to run out. Exports to India have been heavy through the winter.
Most of the pea crop on the prairies has been planted and has adequate moisture. Total acreage is probably a bit above last year.
New crop harvest is approaching in Ukraine. The prairie pea market is set to be priced off new crop, maybe not right away but, internationally, it's already happening. New crop trades at a $1 per-bushel discount to old crop.
Pea prices are good. You're getting $9 to $9.50 per bushel for yellows and more than $17 for greens. There may be some price strength this summer if the majors keep exporting in volume, but traders are already having trouble selling those $9 yellows in export markets. In any case, there are few uncommitted peas left in Western Canada and exporters will be reluctant to make new sales they don't already have covered. That said, pea prices should remain strong. There will be little carryover, the new crop will not be huge and Indian demand should stay strong.
Lentils
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The lentil crop has been planted and has good moisture. As with peas, the market is poised to switch from old crop pricing to new crop and that means a 2-cent-per-pound discount. That switch normally takes place about mid-June.
Early June is also a seasonal high for lentil prices. In most years, lentil prices decline from early June forward through harvest.
Reds are the stronger market. The big buyer is India. The surprise is that the discount on greens has been so persistent. There are certainly adequate supplies of greens in Saskatchewan. They are being pulled up by the red market.
The Western Canadian carryover of reds is set to drop from 500,000 metric tons last August to 100,000 this August. Lairds, in contrast, look to increase from 150,000 metric tons to 300,000. Estons may rise from 30,000 metric tons to 60,000.
No. 2 Lairds trade at 21 cents per pound, Estons trade at 22 to 23 cents and reds trade at 24 cents.
Canola cash prices firm
Cash canola prices edged higher in the past couple weeks as commercial ownership drops to pipeline levels. The four-week average domestic crush pace continues to decline into the final two months of the crop year. Margins have come under pressure with weaker world vegetable oil values, which has also contributed to the slower crush pace. Exporters and crushers continue to struggle to cover their nearby requirements, which has caused larger volatility in the cash market. Strength in the soybean market has been supportive, but this is largely a result of higher meal values. The feedgrains complex will remain firm until new crop supplies come on the market.
Western Canadian farmers have made significant seeding progress nearing completion in most regions. The upcoming crop is developing under favorable conditions. However, new crop canola prices have ratcheted higher on export demand. At the same time, there is limited selling pressure on new crop futures because farmers are waiting until the crop is further developed before making sales commitments.
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Feed wheat
Feed wheat prices are at similar levels or only a slight discount to No. 1 Canadian Western Red Spring wheat at 13.5 protein.
The upside is limited in the feed wheat market, as farmers will start to release high-quality lower protein milling wheat into feed channels.
Cattle on feed numbers are declining after reaching their seasonal peak in late April. Therefore, domestic demand is starting to ease. We also see increased usage of imported dried distiller's grains as the ethanol grind has increased in the past few weeks. The use of alternate feedgrains also will limit the upside in feed wheat values.
Barley update
Cash barley prices in Southern Alberta continue in the range of $295 to $297 per metric ton delivered to the feedlot. Similar to wheat, lower domestic demand and increased use of alternate feedgrains has tempered the upside in the barley market. While the 2012 to '13 carryout will drop to historical lows, the upside in the market is limited. There is usually a surge in farmer selling after seeding is completed, which also will limit upside price potential.
The upcoming crop is developing under favorable conditions and we expect new crop supplies to come on the market in early August if normal growing conditions materialize. The world barley market feels soft with aggressive offers coming forward from the Black Sea region for August forward. The world market freight on board Vancouver, British Columbia, is near $250 U.S. per metric ton, which equates back to under $4 per bushel in central Saskatchewan.
Strength in new crop prices is based on the domestic feedlots. However, once harvest begins, the market will function to encourage demand through lower prices.
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Editor's Note: Duvenaud publishes the Wild Oats Grain Market Advisory. For a free copy, call (800) 567-5671.
