All is calm heading into Christmas week
With traders heading into holiday-mode, agricultural commodity markets are calm, but not especially bright. Many markets are resting at very low levels.
Export markets are generally tough, too. India is not taking as many pulses or edible oils, and there is so much wheat in the world that competition among major suppliers is keeping prices low.
Heading into the holidays and then into 2018, burdensome supplies of most commodities in the U.S. and Canada will keep any market support from turning into a big rally. Look for glimmers of hope further out, when spring weather and planting season can provide a needed spark to rather dull markets.
Wheat markets have found some very modest support in the last week. Price strength, though minimal, has come from less than ideal weather conditions for the winter wheat crop in the U.S. The U.S. Department of Agriculture has not been updating crop conditions weekly now that winter is here, but heading into dormancy, the U.S. crop was not in great shape. While conditions in the fall do not correlate to final yield or production, if conditions are poor there is often some concern for weather through the winter and into the spring.
In the last few weeks, conditions have not gotten much better. Forecasts are showing a quick change from above normal temperatures to well below normal temperatures, which could lead to some damage due to lack of winter snow cover. Time will tell with the weather, and improvements in conditions can come in the spring when rains return. However, the most recent bump from the lows is due to this concern regarding poor crop conditions in the U.S.
Durum markets have stayed steady in the last week. Prices have not been able to find footing with harvest behind and overwhelming wheat supplies limiting any major market support.
Canola markets have been weaker in sympathy with the broader oils markets. Palm oil has stayed pressured and soybean oil prices in Chicago have pressed to their lowest level since early October. Pressure remains on canola prices from the Statistics Canada report's surprise earlier in the month. Prices hit their lowest mark this week since September.
Helping prices was the AgCanada supply and demand forecast: 11.5 million metric tons are expected for exports due to increased buys from China. Even with that increase, stocks build by 2 million metric tons, as AgCanada adopted the Statistics Canada production number for the 2017-18 crop year. In the European Union, rapeseed planted area is expected to decline in the spring as biofuel demand is thought to be fading. But Canadian canola is expected to fill that gap as the European Commission approves it for use in production of biodiesel.
Peas and lentils
India continues to put a damper on the export market as the government announced on Dec. 21 that all import duty exemptions of lentils (and chickpeas) are eliminated. This means that a 30 percent duty is now in place for all imports of any type of those items. Just like with field peas, the expected impact in the short term is for all cargo ships headed to India to be re-routed to alternative markets. Long term, the impact will be felt as demand for Canadian pulses will be lower due to greater production and use of domestically grown crops. Already planted area is higher due to better returns for local producers. Prices for pulses were mostly flat this week.
Global mustard seed prices were lower this week. Ahead of the holiday season, processors have slowed down and reduced usage and demand. This has led to some modest price pressure as 2018 approaches.