Last week, Statistics Canada took its turn to drive markets. As a refresher, the production and stocks report from the Canadian government surprised everyone with bearish data for almost all commodity categories. As harvest is now complete, it turns out that the summer drought did not take supplies down as much as initially feared.
So this week, the U.S. Department of Agriculture had its turn. Its monthly World Agricultural Supply and Demand Estimates Report did not make any changes to U.S. production for the 2017-18 crop year, and overall demand changes were minimal. This points to large stocks for most agricultural commodities heading into the New Year.
One other report that took the market's attention this week came from the Malaysian government. Their monthly palm oil production, export and stocks data was released on the same day as the WASDE. This report showed ongoing expansion of stocks as production has been booming while exports have lagged. Palm oil production surpasses soybean oil and canola oil in terms of global production and use, so higher stocks of this rival fat puts pressure across the entire pricing complex.
Wheat
Wheat prices hit a new low mid-week before finding some minimal technical support. The USDA increased wheat ending stocks on reduced U.S. exports. Global supplies are large (including in Canada as was released last week) so competition for export business remains fierce.
ADVERTISEMENT
With a generally stronger U.S. dollar, the USDA forecasts lower demand for the crop year. Ending stocks for the U.S. are now at 960 million bushels on a 25 million bushel drop in exports. Globally, stocks increased on larger output from the European Union and Canada.
Durum
Durum prices were unchanged from a week ago. Prices had ticked lower following the Statistics Canada report. There has been little to be excited about, and the USDA did not do anything to provide a spark to the struggling durum market. Stocks are held steady from the November WASDE Report at 28 million bushels for the U.S.
Canola
Canola declines continue from last week. Canadian supplies are bigger than initially thought, prompting long position liquidation. Prices are down below $500 per metric ton, and there is little hope of a boost in the near term. Argentine biodiesel imports are reducing the need for canola for biodiesel production. Additionally, the palm oil market has been getting hammered by the news of growing stocks in Malaysia.
Peas and lentils
Pea and lentil trade is focused on India. On the production side, seeding of the rabi crop is progressing speedily. Last week, Indian farmers planted 979,000 hectares compared to 905,000 hectares in the same week a year ago. This brings total land planted so far this season to 12.762 million hectares, almost a million hectares ahead of last year.
On the demand side, there has been little export movement from Canada or other sources due to India's shift to support local farmers by raising duties on imports. France reported slower pea exports (down 20 percent from the previous month and 24 percent from last year) due to weaker demand from India.
ADVERTISEMENT
Mustard
Mustard seed exports have remained slow out of Canada. The Canadian Grains Commission reported just 300 metric tons cleared through reporting terminals. For the crop year-to-date, 7,600 metric tons have been reported compared to 7,900 metric tons by this time in the previous crop year.
Barley
There is little excitement in the barley market. The USDA did not change anything from the November WASDE Report in Tuesday's release. Stocks are set to hold at 61 million bushels in the current crop year compared to 106 million bushels in 2016-17.
China has reportedly doubled its buying of Canadian barley as prices are low and Canada is well-supplied with quality barley. This has taken business away from Australia and Europe due to smaller crops in those markets. The primary use for the barley heading to China is beer production.
