NORTON: Egypt settling its fungus problem
CRESTWOOD, Ky. -- Why should anyone in the U.S. or Canada care about policies in Egypt? Because Egypt is the world's top importer of wheat and has been dealing with major political and macroeconomic issues that impact buying. One of several issue...
CRESTWOOD, Ky. - Why should anyone in the U.S. or Canada care about policies in Egypt? Because Egypt is the world’s top importer of wheat and has been dealing with major political and macroeconomic issues that impact buying.
One of several issues has been the unclear standard of acceptable ergot fungus allowed in wheat imports. The rest of the world allows a small percentage, but Egypt has flip-flopped on a total ban of all wheat with any ergot fungus detected.
It appears this will finally come to an end, as the Prime Minister of Egypt announced the global standard of 0.05 percent presence of ergot fungus will be adopted. This is just one issue regarding government policies impacting Egypt’s agricultural and food businesses, and as a major buyer they have to be watched for future global demand forecasts.
Peas and lentils
Dry pea conditions (according to U.S. Department of Agriculture and Saskatchewan Agriculture) are incredible.
According to USDA, 91 percent of the crop in North Dakota was rated good to excellent.
Saskatchewan is showing 95 percent of the crop in good to excellent condition.
Canadian conditions have been incredibly favorable and development is ahead of normal, but these strong ratings have the market in a precarious position where yield forecasts can only decline. Take France and Eastern Europe as examples where late-season weather issues saw crop reductions from previously high production forecasts.
In the meantime, the lentil market remains uneasy with the unknown acreage reports arriving soon. Statistics Canada will update its acreage numbers on June 29, while USDA will update peas and lentils acreage in the July 12 crop report.
Wheat prices have been weaker, with some spillover pressure from lower corn markets. The recent crop ratings from USDA did not show an expected drop in corn ratings, and the surprised market dropped to its lowest point in more than a month. This pressure, along with an increase in harvest activity for winter wheat, has kept wheat markets soft.
Winter wheat harvest in the U.S. has progressed at a quick pace recently, after getting off to a slow start and some moisture issues in the Southern Plains. USDA reported 25 percent of the crop is complete, compared to 28 percent for the five-year average, and up from 11 percent two weeks ago.
Meanwhile, spring wheat conditions dropped from the previous week, with 76 percent of the crop rated good to excellent, compared to 79 percent previously.
Barley conditions, according to the USDA’s weekly Crop Progress and Conditions report, dipped slightly from last week. Seventy-seven percent of the crop was rated good to excellent, compared to last week’s 78 percent. This is right in line with last year’s 76 percent good to excellent rating.
The canola oil market had been able to stay relatively firm, compared to the falling soybean and palm oil markets, but this past week saw a return of canola to the follower position.
Traders could no longer ignore the favorable growing conditions in the Prairies, and falling fats prices globally. Some technical traders then stepped in, and pushed the market lower.
European rapeseed markets have also been off. North Dakota ratings for canola are strong, with 86 percent of the crop in good to excellent condition, while just one percent is poor to very poor.
Agriculture Canada’s market analysis branch has forecasted new-crop mustard seed production to reach 160,000 metric tons on 174,000 hectares compared to 123,000 metric tons on 140,000 hectares in 2015. Exports for 2016 to ’17 are expected to total 120,000 metric tons, which is right in line with the current crop year. Ending stocks are expected to be very tight in 2015 to ’16, totaling just 5,000 metric tons compared to 35,000 metric tons in the previous year. Agriculture Canada is pegging 2016 to ’17 ending stocks at 10,000 metric tons, which would be a decent recovery.
Durum prices continue to move sideways, with little change in the past several months. North Dakota crop ratings remain favorable, with just one percent of the crop in the poor to very poor category, while 77 percent is rated good to excellent.