CRESTWOOD, Ky. - The U.S. Department of Agriculture released its monthly World Agriculture Supply and Demand Estimates report two weeks ago and, though few changes were made to U.S. balance sheets, some significant adjustments were made to their global supply outlook. A rise in production from Australia as a result of favorable rains across the country led to a bump in global wheat supplies.
Global corn stocks are already large because of the record crop in the U.S., but higher South American output for 2017 is expected to keep supplies at a burdensome level. The market took the December WASDE in stride and quickly shifted its focus back to the macroeconomic environment and demand outlook for the winter.
Wheat
As buyers stepped into the market, wheat prices hit a new low before ticking back up. There is not much new information for the global market and huge stocks are keeping prices low. Australia's output is up, according to the WASDE report from the USDA, but this was known from the previous week's Australian government report. Russia's wheat export price was lower as some storms at port kept movement limited. Look for wheat markets to stay mostly flat into the early part of 2017.
Durum
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Durum prices have not changed from the previous week. Supplies remain comfortable and the market is calm. USDA's WASDE report kept stocks at a surplus, with no change in production.
Canola
The canola market declined modestly last week. Recent support has come from both firmer soybean and palm oil markets as well as uncertainty about the size of the Canadian crop. We now know that farmers were able to get through their harvest after the delays in October and early November, leading to a very strong supply situation.
Additionally, the soybean oil market has been quiet (even with the WASDE report showing a 250 million pound increase in biodiesel demand for soybean oil in 2016 to '17). Palm oil prices have also been flat/lower. The outlook for strong demand remains in place, but there has been a lack of fresh bullish news to keep the market supported. The Canadian Oilseed Processors Association reported a large weekly crush total of 199,700 metric tons, last week, bringing the total crop year crush pace 420,000 metric tons ahead of a year ago. But, supplies remain comfortable even with strong demand, and the expected return of good production out of Europe is limiting upside for the market.
Peas and lentils
The Statistics Canada report confirmed large production of both peas and lentils. Canada's pea output in 2016 reached a record 4.84 million metric tons (up from last year's 3.2 million metric tons). On top of this, Australia's production increased to 370,000 metric tons from 204,500 metric tons last year. Despite a 2.4-million-metric-ton increase in global pea production, prices have stayed firm as demand is strong.
The same can be said for the lentil market. Prices have stayed firm despite confirmation of large stocks. Canada's output of 3.25 million metric tons dwarfs their 2015 output of 2.54 million metric tons, and Australian output is expected to reach 450 thousand metric tons up from 258.2 last year. The U.S. will not release final output until next month, but initial estimates a total of 564,000 metric tons which is up from 239,000 metric tons last year.
Mustard
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Canada's mustard seed harvest is done, and output reached 233,900 metric tons. This is nearly double last year's 123,400 metric tons. While quite large, this is still lower than initial expectations because more than 20 percent of the mustard seed crop had not been harvested at the time of the Statistics Canada farmer survey.
Usually, 99 percent of the crop is harvested at the time of the survey, so the report's findings are widely accepted by the market. But this year's October rain delays kept farmers from finishing their crops and has resulted in some doubts cast at the Statistics Canada report.
