WINNIPEG, Manitoba - The U.S. Department of Agriculture's October supply and demand report cut the American corn crop by 70 million bushels on slightly lower yields. Soybean production was increased on a higher yield, but end stocks were unchanged. The wheat report was little changed.
The biggest surprise was the reduction in corn yield. The soybean yield and production increased and USDA increased usage by the same volume, leaving ending stocks unchanged. Wheat production was down 9 million bushels, but had little impact on futures.
After the report was released, Chicago Board of Trade corn rose 5 cents per bushel, soybeans dropped 5 cents and wheat was little changed.
World ending stocks were nearly equal to last month in corn, wheat and soybeans and should have little impact on futures.
Durum prices at historic highs
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Durum prices in the elevator system are at historic highs for all grades. The Thunder Bay, Ontario, freeze up will slow durum exports through the winter. Certain elevators have withdrawn bids for durum because they do not want to hold durum in a volatile market. When Thunder Bay reopens, the focus will turn to new-crop durum from Mexico and the Mediterranean regions. The market has potential to soften. Exports to the U.S. will be minimal, given the uncertainty in rail movement, so there are limited homes for durum when Thunder Bay closes.
Export tenders from North Africa are coming in a bit softer because the world market is trading three to five months in the forward positions. The European market is dead quiet with sufficient stocks to satisfy demand through April.
Canola prices consolidate
Elevator canola prices consolidated in the past week as domestic crush margins came under pressure. World vegetable oil prices took a sharp drop, setting a negative tone for canola values.
The rally in meal prices appears to have stalled, so canola had little news to continue moving higher. The U.S. soybean harvest is in the final stages and timely rains have enhanced seeding prospects across Brazil and Argentina. Crude oil prices continue to trend lower, setting a negative tone for the energy sector and spec funds appeared to be profit-taking in the canola market. Canola basis levels in the country system remain firm and we continue to see a strong export program to China through the winter. The cash market is working to entice farmer selling, which will be supportive for canola prices moving forward.
The fundamentals for canola are historically tight for the 2014 to '15 crop year.
Barley market edges higher
Feed barley prices percolated higher recently with Lethbridge, Alberta, area feedlots buying feed barley $188 per metric ton delivered. Feed wheat has also moved up to $190 per metric ton in the same region. Barley fundamentals will be historically tight for the 2014 to '15 crop year, and the market needs to ration demand through higher prices. We are seeing limited imports of U.S. corn because of record high rail rates; therefore, barley has room to move higher through the winter. Feedlot inventories in Alberta and Saskatchewan will reach seasonal highs later in December, resulting in stronger domestic demand. Feedlots are also sourcing from farther distances because of the smaller crop in Southern Alberta. Truck logistics are becoming a major issue, and adverse weather conditions are slowing off-farm movement.
