WINNIPEG, Manitoba -- Prairie seeding is about 75 to 80 percent complete. Early seeded crops are up and looking good. The last seeding is generally into good soil conditions. Some wet areas in southern Manitoba may not get seeded.
American corn seeding is probably 85 percent with soybeans at 50 percent. Rain is still keeping the last seeding slow.
Most North American crops look good and have decent moisture.
Commercial canola stocks decline
Cash canola prices have stayed firm in the past week as domestic crushers and exporters struggle to cover their nearby requirements.
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Seeding is finishing up across many regions of the prairies, but slow producer deliveries have been the major supportive factor. Commercial stocks are now estimated at 700,000 metric tons, which is considered pipeline levels.
The domestic crush pace has rebounded to 120,000 metric tons per week, up from only 90,000 a few weeks earlier and the year-to-date crush is at 5.6 million metric tons, compared with 5.5 million last year. Crop year-to-date exports are 6.3 million metric tons, compared with 7.5 million in 2011 and 2012.
It appears that the remaining export demand for the 2012 to '13 crop year is factored into the market. Therefore, we don't see a major demand influence to result in significant upside potential late in the crop year.
The 2013 Canadian canola crop is estimated at 13.7 million metric tons, which is up from the 2012 production of 13.3 million metric tons. This higher production estimate for 2013 is using an average yield of 32 bushels per acre, compared with only 27.7 bushels per acre last year.
Similar to the bean complex, the Canadian canola crop needs favorable weather during the growing season. If weather turns hot and dry in July, the canola market will incorporate a risk premium from the uncertainty in production.
But if favorable normal conditions materialize, yields could exceed the 32 bushels per acre estimate.
Durum update
Western Canadian durum prices have held value throughout spring. Most companies have covered their nearby export requirements, which will limit the upside for old crop prices. Export movement in June and July will slow down as the European harvest progresses.
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New crop French durum prices are currently at a $20 discount to Canadian values for nearby shipment into North Africa while Italy is currently purchasing new crop Spanish durum at a $25 discount to Canadian values.
While North America contends with old crop fundamental tightness, North Africa and Europe are contending with larger new crop production, which is coming on the market at this time. It is difficult to make the case for higher prices for the remainder of 2012 to '13 crop year.
For new crop, durum values will receive some spillover pressure from the overall larger world wheat and coarse grain production. But Canada and the U.S., which are two of the major exporters, are expected to have tighter stocks while Europe and North Africa will have sizeable year over year increases. Spain and Morocco were two regions that experienced droughts last year, but are back to normal production for 2013.
France, Italy and Algeria will experience minor increases in production. Given this fundamental situation, world wheat values will continue to grind lower into the fall. Durum will also come under pressure, but not to the extent of hard red spring wheat and barley.
The No. 1 Canada Western Amber Durum premium over No.1 Canadian Western Red Spring was quite minimal throughout 2012 and 2013, but a new crop premium of 50 cents per bushel is being offered at some locations. This is reasonable given the current outlook.
Editor's Note: 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 canadagrain.com.
