WINNIPEG, Manitoba -- There's no big pull from the trade for canary. Many processors are still handling canary they wanted to move last summer but had been delayed, usually because transportation wasn't available. Others are still working on production contracts for fall delivery. Several processors are no bid on canary. Those buying are generally around 24.5 cents per pound delivered. If you've got volume, you should be able to squeeze out 25 cents freight on board.
Mexico remains the single-largest market for Canadian canary, and it still has the same constraint -- zero tolerance for buckwheat and cleaver seeds. Plants continue to struggle to meet these specs. When they can't, there's another slug of product that has to be moved to a secondary market. When you've got a plant stuffed with clean canary, you're a motivated seller.
Between ongoing transportation woes, Mexican-destined product that doesn't make the grade and the continuing clean-up from slow exports, demand for canary isn't the greatest. Still, $12 per bushel isn't bad. Canary production was up this summer -- 139,000 metric tons versus 131,000 last year. Official statistics suggest we ran out last July, but there are probably still 60,000 metric tons of unreported canary out there.
Pea markets strengthen
Pea markets continue to strengthen, albeit quite slowly. Yellow trade is up to $6.75 per bushel. Greens fetch $8.50, which doesn't open many bin doors but is a good price.
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The seasonals on pea charts show a rising market through mid-December. Trade will slow at that time.
Pea production this year was down -- 3.5 million metric tons versus 3.9 million in 2013, and the carry-in was not onerous. The massive soybean crop in the U.S. is mildly bearish but has only a limited impact on pea prices. At the rate peas are being exported, we'll probably get down to a fairly tight carryover next summer.
The Indian winter crop was planted into less-than-optimal moisture conditions.
Canola
January canola futures tested the $440 area recently, which resulted in country elevator prices reaching $10 per bushel in many regions of Western Canada. Many farmers had this level as their target selling price, resulting in fairly strong selling. The market has taken a bit of a break in the short term but the fundamental structure for 2014 to '15 remains historically tight and there is no signal demand is backing away at the current levels. The domestic crush and export pace continue to run above year-ago levels and buyers are going to be quick to take coverage on this pullback.
Spillover pressure on canola also came from the soybean complex. Rumors of South American soymeal trading into the U.S. set a negative sentiment.
But the U.S. Department of Agriculture and analysts in past years have often forecast large carryouts early in the crop year. Later, after larger-than-expected demand, ending stocks are not so tight. This could be the case again for 2014 to '15. U.S. export sales are running ahead of last year. The South American crop is far from being in the bin with a couple dryer pockets in Brazil. While the oilseed complex is in a correction mode, we don't feel the markets will fall apart so that we have to rush on sales.
Volatile durum market
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The durum market has been volatile and a Thunder Bay freeze up will occur in late December or early January. When Thunder Bay opens, the market is going to be focused on new crop Mexican durum, followed by the North African harvests in May and then European harvests in late May and June. Certain grain companies have withdrawn bids because rail movement to the St. Lawrence is uncertain, and they don't want to hold stocks until Thunder Bay opens again.
Durum prices are near record highs, but the world market is trading Mexican and European new crop at a significant discount to current prices. We are also seeing a fair amount of reselling in the markets; companies that took coverage earlier and are now selling out their long positions. North African countries and Europe have sufficient coverage until Thunder Bay opens. The steam is being let out of the market because of the lower new-crop prices. We will save the last 20 percent as gambling stocks, but don't be afraid to let go of your total supplies. Prices for durum are at record highs and also higher than canola in many cases.
Wheat
Cash wheat prices in Western Canada are slowly percolating higher.
The wheat market is factoring in a number of variables. First, the Australian harvest is coming in lower than anticipated because of the dryer growing season. Second, the Russian winter wheat crop and about 30 percent of the Ukraine crop experienced a dry October and November with cooler temperatures. The crop is not well established going into dormancy and analysts are lowering production estimates for 2015. Finally, the U.S. soft red winter wheat crop also experienced adverse conditions and is not in good condition going into dormancy, while there are also pockets of concern with the U.S. hard red winter crop.
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.
