COLUMN: Market eyes planting progress, weather

CRESTWOOD, Ky. -- With intentions announced for Canadian growers and U.S. progress under way, the market watches closely for weekly reports on planting efforts. While these reports are closely inspected and prices are affected, it is important to...

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CRESTWOOD, Ky. - With intentions announced for Canadian growers and U.S. progress under way, the market watches closely for weekly reports on planting efforts.
While these reports are closely inspected and prices are affected, it is important to remember yield (and therefore production) is not solely determined by pace of planting.
Summer weather is the most important determining factor for spring crops, just as the current rains are more important to the winter wheat crop than when it was put in the ground last fall.
Planting is progressing well, but rains could hamper efforts. Canadian farmers will be getting crops planted soon, as well.
Similar to the broader oil markets (soybean oil trading in the U.S. and palm oil prices from Malaysia), the canola market traded lower last week. The fundamental picture has come to the forefront as the market realized recent strength was overdone, given adequate stocks and the return of more favorable weather in Asia Pacific, where palm is grown.
Argentine weather has been a major issue, as the harvest of soybeans has been disrupted by damaging rains. The extent of the crop loss as a result of flooding is still unknown, but some expect 5 to 9 million metric tons to be lost. This has provided support to soybean and soybean meal markets, as Argentina is a major exporter. But the loss of soybean meal from the global market has shifted expectation to the U.S., which will now have to crush and export more soybean meal, leading to some added soybean oil for domestic consumption. This has helped the soybean oil market drop.
Wheat markets have been mixed, with the Kansas City contract pushing back toward old lows, but the Minneapolis contract trending modestly higher.
The growing conditions in the hard red winter growing areas (Kansas, Oklahoma and parts of Texas) have been favorable and represent the bulk of the U.S. wheat growing areas. But, other portions of the U.S. had to deal with excess rains.
Spring wheat planting is progressing well. Stocks are comfortable globally, as the European soft wheat crop estimates continue to climb.
Peas and lentils
Pea prices finished the week trading mostly unchanged from the previous week. Export demand has stayed firm. The Canadian Grain Commission reported strong bulk movement in the first three weeks of April: 173,000 metric tons have been loaded for export compared to 135,000 metric tons in March and 141,000 metric tons in February. Total shipments for the first eight months of the marketing year have reached 1.89 million metric tons compared to 1.72 million at the same time in the previous year. To reach this large export total, farmers have already sold 73 percent of old crop peas compared to 60 percent at this same time in 2015. This shows the dominance of both strong global demand and lower average ocean freight costs.
Lentil markets internationally were flat to modestly higher last week. The Statistics Canada report on planting intentions for the 2016 growing season confirmed global expectations for a large increase. Total planted area in Canada for lentils is expected to rise 30 percent to 5.14 million acres from 3.95 million acres in 2015. This is the largest single-year increase for lentil planted area in Canadian history. Firming prices is the tight stock situation: inventories are expected to finish the marketing year at 100 thousand metric tons, which is just 3.8 percent of total usage. The CGC reported a remarkable 35,300 metric tons shipped in March compared to 16.6,000 metric tons in 2015 and well above February 2016’s 13,000 metric tons.
Durum prices have stayed flat in the past few weeks.
The recent strength and subsequent drop in the broader wheat market was not followed by durum, as the market has been mostly flat since January - even going back to September 2015, the durum market has traded in the $1 range.
For the past 10 weeks, Canadian durum and wheat exports have averaged 411,000 metric tons, but given government estimates, this is too high.
Exports are slowing to 263,000 metric tons, which is reflective of this needed slow-down in export pace.
Mustard seed exports have slowed, according to CGC data on Canadian shipments. The CGC reported March mustard seed shipments at 1,300 metric tons compared to 1,700 metric tons in February. This is also below the 2,500 metric tons shipped in March of 2015. Total shipments for the current marketing year are 12,700 metric tons compared to 14,200 metric tons for the same period last year.

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