NORTON: Early weather impact on crops
CRESTWOOD, Ky. -- Spring weather is already resulting in some market moves. Weather in the Plains states has been dry, with near-term forecasts calling for more of the same. This quickly took wheat markets higher after new lows at the start of March.
CRESTWOOD, Ky. - Spring weather is already resulting in some market moves.
Weather in the Plains states has been dry, with near-term forecasts calling for more of the same. This quickly took wheat markets higher after new lows at the start of March. Some moisture concerns in Canada could impact planting decisions as sowing season is fast approaching. Agriculture Canada is expecting increased planting in Western Canada, with idle land being slashed and used for crop production. Total planted area is expected to reach 75.78 million acres (up 2.3 million acres from a year ago and 4.4 million acres above the five-year average).
Globally, palm oil production has been weakening because of dryness from El Nino. This has lent support to fats markets. In South America, harvest of corn and soybeans has been hampered by excess rains in some areas, but a dryer pattern is allowing farmers back in the fields to get crops harvested and push grain to ports for export.
Last year’s weather was generally favorable for crops around the world, with El Nino’s positive impact felt in North America, Europe and South America, and negative impact of dryness relatively limited for Australia and Asia-Pacific. At this point, El Nino is still in effect and expected to wane later in the growing season. Predicting exactly how El Nino-Southern Oscillation cycles will impact global weather is difficult, but one would assume a continuation of the previous trend as the growing season is upon us.
The durum market was mostly unchanged from a week ago. The market is well supplied heading into the spring. There was not much going on globally for durum trade this week. Algeria is seeking an undisclosed amount for import, but the EU saw a shift in demand away from durum to soft wheat.
Canola prices have ticked higher following weakness because of China’s shift away from the oil. A weaker Canadian dollar and support from other oils helped spark buying interest and support the market. The Canadian Oil Processors Association reported weekly canola crush was up 2 percent to 158,000 metric tons.
Peas and lentils
Pea prices internationally have stayed firm from the previous week, as global demand is robust. Driving the market is India, which has imported 5.31 million metric tons from April 1, 2015 through Feb. 11. This exceeds the entire 2014 to ’15 marketing year of 4.58 million metric tons. Canada is the main source of these peas, with the Canadian Grain Commission reporting a record pace of shipments. Sales from France have also been strong, with January totaling 10,000 metric tons, up 66 percent from the previous month.
Lentils are mixed, as international demand remains robust. On the flip-side however, new-crop planting is expected to set records in the U.S. and Canada. This would put a bearish tone on the forward markets, as production potential is quite large.
Mustard movement both within Canada, and out of the country via exports, has been slowing over the past week. The Canadian Grain Commission reported 100 metric tons cleared through export terminals and elevators from Feb. 29 through March 6, taking the season to 11.5 thousand metric tons from 12.7 thousand metric tons a year ago.
Wheat prices pushed higher, as the Southern Plains in the U.S. have been dry. This sparked fears of lower output (on already lower planted acreage for winter wheat). In recent days, however, the market has backed off as weather forecasts have improved. Heading into the spring, supplies are very large in the U.S. and Canada.
A lot of attention has been paid to the Egyptians’ erratic pattern of buying wheat for the past few months. Much of the issue is being traced to corruption in the government bread-buying program (which makes Egypt the top buyer in the world). The move to provide bread for its citizens requires a lot of wheat, and has opened opportunities from the top down for inefficiencies to be exploited and corruption to arise. This is all coming to a head, as even with global surpluses of wheat and cheap prices, restrictions on imports and erratic usage have brought about a domestic shortage.