Over the last couple of years, and the last couple of weeks especially, agriculture markets have been impacted more by outside, unusual, or macroeconomic factors than previously. Or at least the markets have been influenced by these factors more frequently than many have been used to. This column has gone over those drivers many times: trade war with China, biofuels mandate uncertainty, hundreds of tweets, attacks in the Middle East, etc.
These issues have not been resolved. And markets are aware that at any moment another surprise could whip prices around (whether that is from a tweet, explosion, or policy). But for this week at least, many market moves were driven by more traditional factors like the weather and harvest progress.
With political attention focused less on the U.S. trade war with China and more on the beginning of impeachment proceedings, agricultural markets could largely fly under the radar.
Wheat
Minneapolis spring wheat futures prices have trended steadily higher with ongoing concerns for quality and harvest issues. Rains have been persistent through the month of September, disrupting fieldwork.
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The U.S. Department of Agriculture showed that 87% of the crop has been harvested compared to 97% for the five-year average pace. While this is not a huge delay, progress has been slowed consistently throughout the late summer and into the fall. Chicago and Kansas City futures have not seen the same strength as spring wheat.
Though these markets are off the lows, prices have not rallied from a week ago. Winter wheat planting in the U.S. is basically on schedule with 22% complete. The wet weather across the Plains provides good moisture for early crop development ahead of winter dormancy. Also lending some support to wheat prices is what is going on in the Southern Hemisphere. Argentina's wheat crop already is struggling, with dryness taking yields down by as much as 20% in areas. Also, Australia's drought issues continue to plague the eastern growing areas.
Durum
The Minneapolis durum price has risen for a second straight week. While prices are still historically cheap, any support from over a year of steady, weak pricing is a positive.
The wet weather that has impacted the quality of the spring wheat crop is an issue for the durum market, as well.
Canola
The canola market has continued its mostly sideways move. Prices are off the lows hit in June and early September, but the market has not been able to mount any significant rally without its Chinese trading partner.
Even the support felt from the crude oil rally (sparked by attacks on Saudi Arabian oil refineries) has waned. It has not helped that soybean oil prices have trended lower this week, as have palm oil futures in Malaysia (on large stock expectations for September).
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Barley
U.S. barley harvest is wrapping up. USDA reported 92% of the crop done compared to 99% for the five-year average pace. The only states with more work to do are Montana and Washington, while Idaho, Minnesota, and North Dakota are all very close to done.
Pulses
Pulses are facing another potential increase in trade barriers with India. The Indian government is mulling an increase in import duties and/or quantitative limits on imports. This saga has impacted global pulse markets for the last couple of years as the Indian government seeks to support local growers. However, aggressive trade barriers have resulted in uncertain markets for growers in Canada and the U.S.
Mustard seed
Mustard seed markets in Canada have been mostly quiet as traders await news on yield and crop quality. Harvest in Canada is over a quarter of the way done, lagging last year and the five-year average pace considerably.
