Variety of issues are derailing farm bill's primary focus
The U.S. House of Representatives is set to vote on the farm bill, but a variety of issues are derailing the bill's primary focus: farming. The first is the work requirements that may be added to Supplemental Nutrition Assistance Program, or SNAP, participants. Some find the requirements to be too harsh while others think it will help many get back to work.
Another issue is immigration. Members of the House Freedom Caucus are threatening to back off support of the farm bill unless they receive support on their immigration reform efforts.
Lastly, there has been a lot of debate around the government's role in the sugar industry, where government support prices and purchases at a certain level remain despite similar programs for other crops all falling away over the years.
Wheat markets are off of the lows hit late last week. Prices had fallen as weather conditions improved in the U.S. Central Plains. Supplies are large and crop conditions continue to improve. The U.S. Department of Agriculture showed a bump in condition ratings to 36 percent good to excellent for the winter wheat crop. And the spring wheat planting progress in the U.S. has picked up as well. Fifty-eight percent of the crop has been sown compared to 67 percent for the five-year average. But prices have ticked back up modestly this week. Support came from dryness concerns abroad: Australia is too dry and there are concerns for the development of the crops in the former Soviet Union countries. Canada's prairies are too dry as well.
The durum market continues to be depressed on adequate supplies. The North Dakota crop is behind in planting (like many other crops) at 27 percent completion compared to 36 percent for the five-year average pace.
The canola market has been mixed, but ended the week higher. For the bears, demand has stagnated and this is keeping a lid on market strength. Stocks remain large from the 2017 crop. Additionally, planting progress has caught up to the normal pace. Saskatchewan reported that 26 percent of their canola crop has been planted. For the bulls, the rapid planting pace has been allowed by dry weather which is not great for the early development of the crop. Rains are needed and the market is keeping a risk premium intact.
Peas and lentils
Last week, Statistics Canada reported very large stocks of pulses. Lentils totaled 1.53 million metric tons stored on farms, which is the largest for March 31 stocks since 2014. Despite the large stocks on hand, the market is was relatively steady. Planting efforts are of more importance in the market's view, and favorable weather has allowed for significant progress for peas and lentils in Saskatchewan. Lentils are 57 percent complete and field peas have reached 63 percent completion. Looking ahead, rains will be needed to help the soil that has drawn down moisture reserves in the last couple of weeks.
There has not been much excitement in the mustard seed market of late. Pricing has been driven by currency fluctuations over weather or planting efforts.
Barley planting continues to be behind the normal pace, but weather improvements have allowed for farmers to make up a lot of ground in short order. Sixty-two percent is now complete compared to 42 percent a week ago. The five-year average pace is 74 percent, and favorable weather should allow progress in the week ahead.