The Northern Hemisphere is in wait-and-see mode on a lot of fronts. Weather is not much of a factor unless there is a bad storm or winter kill for the winter wheat crops. Export demand is tough to track with no information from the U.S. government. Stocks data and monthly supply and demand estimates from the U.S. Department of Agriculture are also missed. So the winter gives an opportunity to check with South America's growing season ... and Brazil is having issues.
Brazil boosted its planted area for soybeans with an opportunity to take some export business from the U.S. as their trade war with China raged. Optimism for a record crop was high, but heat and dryness have damaged crop expectations. Though some areas have seen relief that should limit further output reductions, the crop will not be the bin-buster that many expected. Brazil's soybean output will likely fall to 117 million metric tons,
Wheat markets continue to move mostly sideways (with perhaps a little bit of support). There is little to be excited about from a supply perspective, as the U.S. winter crop planted area remains unknown due to the government shutdown. Additionally, spring weather is not yet a factor for prices. What is driving the market is the increased demand for U.S. wheat now that Russia's price is not competitive and supplies are dwindling. Look for prices to see some short term support as business shifts to the U.S., though a major rally is not expected (as the market was expecting this shift to the U.S. all last fall). Pricing should find pressure in the spring.
Durum prices have held at these low levels. Do not expect any significant price movement in the coming weeks until there is new crop acreage expectations and early spring weather to impact expectations for the 2019-20 crop.
The canola market has been firming over the last few weeks. Prices are gaining strength but the market drivers are not so clearly bullish. Supporting are the overall strength of oils, with palm and soybean oils rallying on expected lower output in 2019 for the former and good demand for the latter. Additionally, supplies of European rapeseed are getting tighter, leading to strength for canola. But the bears are keeping support limited as the uncertain relationship between China and Canada has diminished some hopes for strong canola demand, especially as six U.S. export vessels are loaded up and will soon be heading to China (spiking shipments to a 10-month high). As we have seen frequently with these trade negotiations, things can change in a hurry and what is said by officials does not necessarily lead to what they say it will. But, the 90-day window is nearing its final month and the future of soybean and oilseed trade is unclear.
Peas and lentils
Pulse prices have been firmer as demand is robust for exports. Shipments of lentils through mid-January are more than two times the volume loaded for the previous crop year to date. Supplies are thin at port, meaning demand is up for the local suppliers. Similarly, peas have been shipping quickly after a slow start. Total shipments loaded for this crop year are just 11,000 metric tons below last year's pace (and that number is getting smaller).
The mustard seed market saw little activity in the last week. As a result, pricing has been steady, with no price movement reported. The Canadian Grain Commission showed 300 metric tons of mustard seed export clearances in the second week of January, bringing the crop year to date total to 9,800 metric tons compared to 9,300 metric tons at this time last year.
The barley market has had limited information to trade on in the last few weeks. Pricing will calibrate once data from the U.S. Department of Agriculture is updated upon funding of the government post-shutdown. For now, export sales were reported by Jordan, which purchased 60,000 metric tons of feed barley with an optional 120,000 metric tons maximum.