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Post-USDA report fallout in markets

CRESTWOOD, Ky. -- News during the winter months is often thin for producers and users in the Northern Hemisphere. Harvest is over and planting for the upcoming crop is still months away. Demand factors are watched closely from December through Fe...

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CRESTWOOD, Ky. - News during the winter months is often thin for producers and users in the Northern Hemisphere. Harvest is over and planting for the upcoming crop is still months away. Demand factors are watched closely from December through February, as feed, exports, and consumption are often the main market drivers.

But, the January U.S. Department of Agriculture reports tend to give the market plenty of information to trade on, and set the stage for the coming crop cycle.

Last week, USDA released reports on quarterly stocks of major grains, winter wheat planted area, and their monthly supply and demand estimates. The stocks report showed that supplies of the major products were large and in line with analysts' pre-report expectations. As a result, traders were not swayed by this report, but instead focused on the winter wheat planted area and the World Agriculture Supply and Demand Estimates.

Winter wheat area was down even more than expected, sparking support for wheat. And WASDE showed lower yield and harvested area for the record corn and soybean crops, also lending support. With this swath of reports in the rear-view mirror, traders will begin to look ahead to spring planting decisions and eventually the weather.

Wheat

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Wheat markets have firmed up in the past few weeks. Previously, support had come from potential winterkill, as areas of the U.S. got very cold with little snow cover. Temperatures have warmed and precipitation in some areas has been seen as beneficial. But, areas of Oklahoma and Western Kansas are still in a drought and will need precipitation by the spring to help with the crop. The bigger news for the wheat market is the aforementioned winter wheat seedings report.

USDA showed 32.4 million acres planted to winter wheat from 36.1 million acres in the previous year. This was well below the expected 34.1 million acres and is actually the smallest area planted to winter wheat in 109 years.

The fact that prices have been steadily working lower for three years has made it very difficult for wheat farmers to make money, limiting plantings for 2017. Adding to some support is continued strength on the world market, with Russian export prices firming.

Durum

Durum prices have stayed steady despite the recent strength in wheat. USDA did not alter the durum U.S. balance sheet, and supplies remain comfortable. There has been very little market movement to speak of over the last several weeks.

Canola

Canola futures have been a follower of the broader oils markets. Support from soybean oil has spilled over to canola futures, pushing prices back above five dollars.

Peas and lentils

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Pea markets have stayed quiet for the last several weeks. Exporters are focused on meeting shipping commitments with little new business. Seeding progress in India is ahead of the five-year pace through the second week of January.

Total area planted has now reached 15.5 million hectares compared to 14 million hectares last year, at this time. This puts farmers on pace to reach or possibly exceed the record 16.2 million hectares planted in 2013 to '14.

USDA released its final production estimate for 2016 lentils, showing a 141 percent jump from the previous year to 575,400metric tons. The combination of record yields in many areas on area nearly doubled from the previous year (a staggering 933,000 acres) led to the huge output.

Mustard

USDA's January report showed a spike in U.S. mustard seed production to 43,700 metric tons. Canada's production was also up, reaching 233,900 metric tons from 123,400 metric tons in the previous year.

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