WINNIPEG, Manitoba -- Soybean harvest has started in southern Manitoba. Yields and quality seem OK. Most is coming in at 30 to 35 bushels per acre. Even better, they're dry.
You'd think there might be a window here where the first harvested northern fringe soybeans could move into the U.S. before the Midwest harvest starts. The U.S. carryover is a tight 145 million bushels, but harvest has started in the deep south and, much more important, there is little capacity to move soybeans, or any other crop, into North Dakota. Consequently, Manitoba beans are being shipped to Vancouver and sold into the world market. Bids aren't great.
Elevators are paying from less than $8 per bushel to $8.64. That's a basis of $3 to $3.60 (Canadian) under Chicago Board of Trade November soybeans. The average of the past five years is $1.71.
Chicago Board of Trade soybeans appear to be in a freefall, but oil has been trading flat for three weeks and the bottom might be near.
Oats quality issues
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The quality of oats, like most crops, is sharply below that of a year ago. This year, most oats got at least one rain, maybe several. Mildew is general. Sprouting is a real problem in swathed oats. Quality is all over the map.
It's not easy to sell oats. Most southern Manitoba elevators are still trying to take in contracted oats. They're paying $3.15 per bushel, when they do take them. Elevators in northeast Saskatchewan, normally the lowest priced oat market in the world, are paying $2.85, which is phenomenal, but this is only for high quality.
Your best bet for regular oats in Saskatchewan is delivery to Buchanan for movement by rail. Allan Johnston Grain Marketing is paying $2.80 delivered. Linear Grain in Carman, Manitoba, has been moving oats to Minneapolis all through last winter. It's buying delivered Carman at $3 per bushel, but it needs a sample before they buy. U.S. customers are discounting most current oats shipment but not rejecting.
The total supply of oats in Canada is 3.7 million metric tons, well under the 4.4 million last year. There was a glut of oats last year, and a huge carry in, but the 2014 crop size dropped from 3.9 million to 2.6 million metric tons.
Rail transportation for oats moving south from Manitoba is hard to source. Several companies are lamenting the lack of cars. This is unlikely to change any time soon.
Canola
Western Canadian canola prices continue to trend lower from weakness in the bean complex and heavy producer selling. Farmer deliveries into the elevator system for the week ending Sept. 7 were 1.2 million metric tons, up sharply from only 700,00 million metric tons last year. Farmers are liquidating year end stocks. The weaker price structure has encouraged deliveries in fear of lower values later in the crop year. Export and domestic demand is also higher than last year, but the major difference is the softer prices for canola products. The U.S. is a major market for canola oil and canola meal, and U.S. soybean crush will surge during harvest, resulting in larger stocks of meal and vegetable oil. The Chinese ban on U.S. dried distillers grains with solubles is causing weakness in all feed protein values.
U.S soybean harvest is right around the corner, the crop might be somewhat larger than the U.S. Department of Agriculture estimate. The U.S. soybean complex is functioning to encourage demand, which will continue to weigh on canola prices and product values.
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Canola will eventually divorce from the bean complex because of the tighter fundamental structure. Canola prices need to move higher next spring to encourage acres and slow the export program in the latter half of the crop year.
Another risk to consider is the South American bean crop, which is expected to be marginally higher than last year.
Corn weighs on feed barley
Lethbridge area feedlots were buying feed barley in the range of $160 to $163 per metric ton the week before last. Farmers in the major feeding regions of Alberta have been aggressive sellers through harvest. At the same time, feedlot inventories are at seasonal lows, resulting in limited demand. The major factor weighing on barley is the weakness in the U.S. corn market.
USDA estimated the corn crop at 14.4 billion bushels, up from 13.9 billion bushels last year. U.S. domestic demand is expected to increase, but export demand will drop below year-ago levels. The Chinese ban on U.S. corn because of a nonapproved genetically modified variety has resulted in slower exports of corn and dried distillers grains. Second, larger corn crops in Europe and Ukraine have resulted in greater competition in the export market. Remember, Europe has a burdensome feed grain supply because of the adverse rains in France during the winter wheat harvest, as well.
There is a large feed wheat program from France to China this fall.
U.S. corn is trading into Southern Alberta at $167 delivered feedlot and we are seeing more corn move into the rations. This is resulting in softer barley prices in the short term. About 20 percent of the wheat crop will be feed quality. Farmers looking to sell feed wheat are reliant on the domestic market given the limited offshore movement in the first half of the crop year. The barley market has downside pressure in the short term.
Editor'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.
