Weather Forecast



Commodity prices keep falling

Last week it was the U.S. Department of Agriculture reports that dropped the market. This week, the trend continued on weather and fund positions. While not universal, August weather has been very good. The Northern Plains and Southern Prairies are still suffering and the damage of the earlier part of the summer is irreversible.

But in the Corn Belt and across other parts of Canada, things are looking very good. The other aspect is the speculators reducing their long position. All spring and summer, funds had been adding to their long position. This started to change as weather improved in August, but following the USDA reports, funds really started to get out of those long positions. Look for significant downside from present values to be limited, but a major rally will be tough at this point in the growing season.


Wheat prices have been falling this week. Chicago and Kansas City have seen declines to lows not seen for several months. Looking at years since 1980, these markets have had their biggest percentage decline month-over-month from July to August. Minneapolis also has been pressured. The world simply has a lot of wheat, and this was in jeopardy just a month ago. The Russian crop is huge with large area and good yield.

France has recovered well from last year's disaster. The U.S. is finishing harvest of the winter wheat crop, which is smaller but still a good one even with lower planted area. Yes, spring wheat in the U.S. has major problems, but unfortunately there is a lot of wheat in the world that will keep overall prices low.


Durum prices actually dipped in sympathy with the broader wheat market. Conditions remain pretty bad for the crop, but overall there has not been a lot of change. The recent rains in the Northern Plains likely helped only in a few cases, but the market is aware of the lower production expectation as harvest is approaching.


The canola market has been a follower of the soybean oil market. While declines are in place for the grains, oils have been holding out. Demand has been good. For canola, uncertainty about the size of the new crop on top of old crop tightness is keeping the market firm. For soybean oil, lack of soybean meal demand is leading to lower crush and tighter supplies. Couple that with uncertain biodiesel policy, and the market has been reluctant to fall significantly.

Peas & Lentils

Harvest is progressing well in Canada, actually exceeding the normal pace. According to reports from Saskatchewan Agriculture, 35 percent of the lentil crop and 28 percent of the field pea crop have been harvested. This is ahead of the five-year average pace of 5 percent and 15 percent for lentils and field peas, respectively. There have been a few rain delays in some areas, but most forecasts suggest that this trend will continue.


There has been little news in the mustard market as farmers and traders alike wait for information to trade on for the new crop.


Barley harvest is under way in the U.S. and rolling along. The USDA reported 52 percent completion from 25 percent last week and 40 percent for the five-year average. For the remaining crop, 49 percent is rated good to excellent compared to 45 percent last week.