CRESTWOOD, Ky. - Commodity markets often see a dip in activity heading into the Christmas to New Year's holidays. This is partly because in the Northern Hemisphere, there aren't crops growing besides a few winter grains that are entering dormancy. You do not see the major price swings from weather forecasts and surprise storms that you do during the spring or summer, unless either a shipping point is disrupted or the winter wheat crops are damaged).
Also, government reports are out for the year. Both Statistics Canada and the the U.S. Department of Agriculture have released their major reports for December, with nothing more until mid-January when the USDA will update balance sheets and report on quarterly grain stocks and winter wheat planted area. Until then, the markets do not have any major agriculture reports off of which to trade.
And most important, people check out a bit and take time off. While some end-of-year position squaring and covering is taking place, much of this has been done in the previous weeks so that people can focus on other things, whether that is time off with family or just other business priorities.
Look for a return of higher market interest in the early part of 2017.
Wheat
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Wheat markets have seen little movement in the past week. There was some support with a winter storm and lower temperatures coming to the Plains where there was not adequate snow cover. This raised fears of potential freeze damage. But, this only brought prices back up to the previously established trading range. The huge supply situation globally is keeping a lid on any rally.
Durum
For the past week, there has been very little durum news to drive the market. Prices have maintained their low level and ended the week unchanged from the previous.
Canola
The canola market has found some pressure. While demand remains strong, crush is keeping pace. Additionally, supplies of canola are large, which has limited upside potential.
Outside of the fundamental canola situation, the soybean complex was lower last week.
South America is set to have a very large crop, and the market continues to digest the fact that the higher Renewable Fuels Standard mandates might not tighten up the soybean oil balance sheet as much as initially feared.
Peas and lentils
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After a difficult end of harvest, the pea and lentil markets are just coasting into 2017, right? Perhaps not. Some uncertainty about demand prospects from India in the coming year are making the market nervous. There are currently exemptions in place that allow pulses shipped from Canada, France and the U.S. to not be fumigated with methyl bromide at source.
These exemptions have been in place since 2004, but are not expected to be extended after expiration on March 31. This would increase cost and competition for shippers doing business with India, a major pulse buyer and consumer.
Another issue for lentils is the Canadian Grains Commission grading of green lentils. Without going into too much detail, the CGC has a voluntary rating system that takes submitted samples and grades them based on quality and protein content.
This year, 61 percent of the samples fell into the top two grades. But, some buyers are seeing actual supplies differently and are losing confidence in the CGC's ability to rate the crop. As one importer stated, "the CGC knows grain but they are ignorant about lentils."
Mustard
Last week, there has been little market-moving news reported for the mustard seed market. The CGC reported just 500 metric tons of mustard seed export clearances last week, continuing recent slow movement of the crop. This brings crop year total to date to 8,400metric tons, which is just ahead of last year's pace.
