Markets can calibrate with U.S. shutdown over
December and January are typically not very exciting for agriculture markets. Other than the release of winter wheat planted area and quarterly grain stock levels from the U.S. Department of Agriculture, winter months hold less excitement for commodity pricing.
One of the usual things that the market follows during these months is export sales to determine demand of major crops. All of this has been impossible during the government shutdown, which thankfully has come to an end (for now). The Department of Agriculture has a plan to get data and reports flowing and caught up over the next few weeks. But be careful of the market's reaction. Over the last data-free month, pricing has taken direction from a small amount of information. So the calibration for the markets back to reality may result in some unseasonable volatility. We will see just how good at price discovery the markets can be without the usual guides of U.S. Department of Agriculture data.
Additionally, applications for aid for U.S. farmers hurt by the trade war with China are still being accepted, with the deadline for application extended to mid-February.
An item of note for Canadian exports: Port Metro Vancouver has been able to resolve rail congestion, allowing fluid operations at the country's busiest port.
Wheat continues to have its small up-and-down moves that take the market nowhere. Thankfully, data on export sales will give the market some direction in the coming weeks. It is expected that demand has picked up for U.S. wheat as Russia slows sales. The U.S. Department of Agriculture will release updated supply and demand estimates on Feb. 8, along with winter wheat plantings. These reports will be critical for pricing in the weeks ahead.
Durum prices are holding steady in Minneapolis. There has been nothing of note for the durum market and little is expected to support prices from these lows until news on new crop is reported.
The canola market has come back down in the last few days, with nearby futures unable to push through a technical resistance point at $490.
The trade relationships with China for both the U.S. and Canada are impacting the canola market. News that was dropped in the White House of a 5 million metric ton soybean purchase by the Chinese got the complex rallying late in the week, but it meant little for the broader fundamental picture. And there is just one month left before tariffs tick up to 25 percent for Chinese goods.
Canola demand is greatly impacted by how much the Chinese are buying, which is dictated partially by how many soybeans they plan to buy.
Throw in some uncertain production and trade issues with palm, along with volatility in the crude oil market, and 2019 looks to be a muddled mess for oilseeds and oils.
Peas and lentils
Agriculture Canada released its first forecast for 2019 crop production, and lentil area is expected to fall to 1.35 million hectares (3.34 million acres). This is down from the 2018-19 crop year's 1.525 million hectares (3.77 million acres). Production is expected to drop to 2.0 million metric tons from 2.092 in the previous crop year.
In its latest report, Agriculture Canada reported its first forecast for planted area for 2019. Total area for mustard seed in Canada is expected to increase to 205,000 hectares (507,000 acres) from 204,000 hectares (504,000 acres) a year ago.
Total production is set to rise to 180,000 metric tons from 173,000 in the 2018-19 marketing year. But stocks should stay almost unchanged with exports rising to 120,000 metric tons from 112,000 in the current crop year.