Winter is coming to a close (despite this week's storms across much of the U.S. suggesting otherwise) and markets are getting into supply-side questions as the market drivers.
The biggest questions revolve around plantings...how many acres will be planted to each of the major crops. This is always a question, but given the huge variety of trade issues across the commodity landscape, oversupply of many crops, and generally tough economic and finance conditions for many producers, the market is very unclear on expectations for spring planting.
Wheat prices have seen some support off of the recent lows. There has not been a fundamental shift to allow for this rise, rather some technical-driven fund buying prompting some support. Note that funds had been extremely short, and on the recent decline, many stepped in and started buying. End users have been attracted to the bargain, too. But looking around the world, it is difficult to see any major support. The U.S. is well supplied.
Export competition is fierce, with purchases recently going to France and the Black Sea Region. Crop conditions for winter crops coming out of the winter are mostly good in the U.S., Europe, and the Black Sea Region. Look for some pressure into the spring.
Prices for durum wheat have not changed much over the last several months. Prices are holding at the lows with little to get excited about. Informa pegged expected planted area for the U.S. in 2019 at 1.85 million acres. This is a dip from 2.07 million acres a year ago. Data from the U.S. Department of Agriculture will be released on Friday, March 29.
The canola market has finally seen some support. Crude oil markets have been firmer, allowing for canola to take that ride upward. The fundamental picture for canola has not changed, however.
Supplies are more than comfortable, but the biggest question is demand. Sales of canola seed to China have been very slow and the lack of future demand prospects is looming over the market. On top of this, the ongoing trade war between the U.S. and China has kept the soybean complex pressured.
With spring planting not far off, look for weather and farmer planting expectations to shape market direction in the months ahead.
Mustard seed markets have been steady in the last week. Prices have not changed much, but currency fluctuation improved basis values for producers. Overall, demand for mustard seed has been good, with shipments to the U.S. increasing as the crop year has gone on.
The story on pulses this week is that of slow demand. Many buyers are covered and purchases have been slow for peas and lentils as a result. Data from the General Customs Administration of China showed that January was a record slow month for field pea imports at 192.2 thousand metric tons. This was down 16 percent from December.
There has been so much focus on the U.S. and China trade war, that some of the other trade relationships that have undergone changes under the Trump administration have gone unnoticed...at least by the broader media, though not by those impacted.
There are a lot of farmers of wheat, barley, and other crops in the Northern Plains that have been struggling to keep business relationships going after the U.S. left the TransPacific Partnership. Japanese importers are looking elsewhere for barley imports as higher tariffs are pricing the U.S. out. And a recent sale of French barley to China when Australia's barley had a quality issue means that demand is not coming to the U.S.