Russian wheat export restrictions expected
The last couple of weeks have seen some news out of Russia that have resulted in dramatic price swings. To catch up, a few Fridays ago rumors begin to circulate that the Russian Agriculture Ministry intended to curb wheat export demand by placing limits on shipments once exporters hit 30 million metric tons of exports. This hit the news not by an official announcement from the Russian government, but from a word-of-mouth exchange with one of the exporters allegedly present during a discussion about this potential policy. Prices climbed immediately on this news, as the total wheat supply situation is contracting this year due to poor crops in the European Union and Eastern Australia. If another top exporting country (Russia) is pulling itself out of the market, it puts more demand on the U.S. and Canada to fill global demand.
The following week, the Russian Agriculture Ministry denied this report leading prices back down and calming fears of some global supply problems. But this week brought the same story back, this time officially coming from the Russian Agriculture Ministry. Likely around December (given the current sales pace of Russian wheat) export restrictions will be put in place by the Russian government to withhold wheat from global sale. This put some support in the wheat market, though it was limited heading into the weekend.
Wheat prices jumped around with buyers stepping in on Russia news, then quickly selling with some gains booked. The market simply is struggling to grasp just how much the global wheat balance is going to shift around with the European Union likely reducing exports, Russia and Ukraine having quality issues, Australia in a drought, Argentina with a good looking crop and the U.S. and Canada set to fill in the gaps. Spring wheat harvest in the U.S. is in its final weeks, with 77 percent of the crop done. Look for wheat markets to settle as the harvest of an excellent corn crop approaches.
Durum prices continue to hold at the lows. There is little to get the market moving until harvest results are known. The harvest efforts are about halfway complete in North Dakota.
The canola market has remained under the $500 mark as overall pressure from fats markets is keeping prices in check. Production in Canada is not certain, and the market expects about a 5 percent decline from a year ago (to 20 million metric tons). Much of the crop in Saskatchewan is in swath (43 percent) but only 7 percent has been harvested; there is a lot of uncertainty remaining in terms of this years canola production.
Peas and lentils
Pulse output is expected to be a good average for peas and slightly below average for lentils in Canada this year.
Mustard prices have remained steady in recent weeks. Some of the crop in Saskatchewan has been harvested (24 percent).
The U.S. barley crop harvest is approaching its final weeks. The U.S. Department of Agriculture's weekly Crop Progress and Conditions Report showed 80 percent of the crop done compared to 72 percent for the five-year average pace. Look for wet weather in the coming week to slow efforts to some degree, but even still, the harvest should wrap up by mid-September.