Exceed Grain Marketing’s Client Exclusive report is dedicated to covering the ongoing trends and significant highlights within the local market, while simultaneously offering a perspective on the global landscape. This approach ensures a comprehensive understanding of the factors influencing the market at both local and international levels. Our aim is to deliver current, up-to-date information specifically tailored to the crops impacting your operation. Work with your Exceed Grain Marketing advisor to devise specific strategies that may work for your crop.
MARKET HIGHLIGHTS
- Canola markets finished Friday strong, up $9.40 for the session and over $17 for the week.
- Wheat markets ended up having a strong week. Spurring local specials as end users look for a bit more coverage.
- Bean oil was strong to finish out the past five days
- EU Rapeseed had a simular gain for the week, finishing up 16 euro per tonne. Palm oil bounced around aggressively all week
- Next Thursday, April 11th, we will get fresh USDA WASDE DATA. We will also get a new update from Brazil’s CONAB around the same time to give us some updated fundamental figures to chew on for the Thursday and Friday session. Expect positioning heading into the report.
- India extended its pea import exemption from end of April until the end of June.
- Crude oil has been on a tear recently, sitting at $86 per barrel for West Texas. Natural gas has been a laggard in general due to a slow heating season in the northern hemisphere.
- Tunisia’s most recent Durum tender is expected to have grabbed some grain of Canadian origin. Prices for this tender are around $30 USD per tonne lower than the same tender set in February.
- Funds were net buyers of Canola, Soybean Oil and Shorted Spring Wheat, Soybean Meal, Soybeans and Corn in the most recent data from March 26th to April 2nd.
- Advance Payment Program payments are now available to Canadian farmers for the 2024 program year. Often referred to as the CCGA cash advance. The program provides up to a $1 million cash advance with a $250,000 interest free bearing portion.
- Monday afternoon we received the first crop progress report of the 2024 season for the US crop:
- Winter Wheat conditions came in at 56% Good to Excellent. Trade was expecting to see around 57% so one percent less than expected. 28% was the initial figure for the first report last year.
- Worst areas are found in South Dakota, Texas and Kansas.
- Corn planting came in at 2% complete, right as expected. Still very very early in the corn planting campaign. Next update on Monday
- Exports came in at a dismal 40,000 tonnes this week. Last week, Canadian canola exports had one of the best export weeks of the year, exporting 244,000 tonnes of canola last week. Pushing the export pace for the year higher on a weekly basis. Commercial stocks at elevators, crushers and terminals sits at nearly 1.4 mmt as of March 24th
- See updated chart below, still tracking towards that 6mmt export pace, but changes weekly.
- As we enter the 2024 North American planting season there will be increased emphasis on the Drought Monitor and precipitation forecasts going forwards. A simple shift in weather pattern and the geography it is focused upon will make all the difference going forwards.
- Brazilian soybean harvest 3/4 completed. Argentinian soy harvest in early stages. Crop size is more understood and weather having less and less of an influence.
- Market shifting to South American corn production and we are still watching precip and temperatures in key South American corn production regions. Corn harvest begins late April and Early May so we are in a very important time for the crops life cycle.
- Last Thursdays Prospective Planting Report was the main report of the week. Corn was the real surprise of the trading day. Detailed Summary Below.
- Prospective Planting Acreage (March 28th, 2024)
-Corn 90.04 million acres vs 94.6 million last year and 91-92 million acres expected pre report
-Soybeans 86.5 million acres vs 83.6 million last year and 86.5 to 87.5 pre report
-Wheat 47.5 million acres vs 49.6 million last year and 47-47.3 pre report
Of the wheat acres 11.3 million are destined to be spring wheat vs 11.2 last year
Corn was the surprise in todays report with limited estimates reaching as low as a 90.04 million acre corn number.
Quarterly stocks report was also released today. Stocks came in fairly close to estimates with some divergence. Corn lower and beans and wheat stocks higher The most notable takeaway from the stocks report is the growth from last years stocks at the same time.
Quarterly Stocks Report:
-Corn 8.35 billion bushels vs 7.4 billion bushels
-Soybean 1.85 billion bushel vs 1.69 billion bushels
-Wheat 1.09 billion bushels vs 0.94 billion bushels - Private Analyst, Strategie Grains, Cut the EU rapeseed forecast by 200,000 tonnes to 18.1 mmt. Last years harvest was 19.9 mmt.
- European Union proposed new tariffs on Russian grain: 95 Euro per tonne for grains. 50% for other crops. Subject to approval by the 27 member organization.
- Some concerns in Russian wheat production regions getting dry. French wheat crop facing some troubles as well, supplies could get tight if weather does not improve in the coming weeks.
- Last week, Buenos Aires Grain Exchange cut the Argentinian corn crop to 54 mmt from the prior 56.5 mmt due to earlier heat wave. Left soybeans unchanged at 52.5 mmt
- Statistics Canada Acreage Estimates Analysis.
- Canola acres down year over year, Spring wheat and Barley were down as well.
- Chickpeas showing the largest percentage gain year over year and Flaxseed the largest drop.
- Oat acreage came in on the low side of pre report estimates despite a large year over year spike in acres. Oats still running some relatively low acreage numbers compared to years past. Take a look at chart below to see the past few years of acreage
- Canola came in near the bottom end of pre report estimates, but more in line with some longer term averages for acres.
- Stats Canada conducted the survey from December 14th – January 22nd and surveyed 9,600 farms. There have been significant changes in New Crop markets since this time and one can expect that final planted acreage will shake out a tad different than what was reported.
- Spread between exportable canola has grown in recent weeks. Just a few short weeks ago, Canadian canola was trading below Australian values at export position. Canadian canola has regained some of its premium to the AUS crop. See FOB Chart Below.
- Some private analysts beginning to throw some concern into the EU winter wheat crop, beginning to trim some estimates production values. More below in the wheat section
- CONAB Brazil:
- CONAB lowered soybean production estimates from 149.4 to 146.9 mmt. The corn estimate was lowered from 113.7 to 112.8 mmt.
- For the month of February US crushers processed a record 186 million bushels vs 165 million bushels same month last year. Crush came in higher than estimates and also resulted in a higher soybean oil stock levels as well.
- Western Canadian Producers can now access spring provincial crop insurance prices for the 2024 crop year. Saskatchewan was released last week while Alberta and Manitoba have been out for a few weeks now
- United States spring crop insurance prices released. Lowest coverage since 2020 in most cases.
- European wheat production estimates were dropped by about 1mmt here recently for the crop due to some adverse weather conditions.
- Prior report section
- The USDA Ag Outlook Forum placed initial acreage at the following mid February:
- Corn acres 91 million vs 91.8 pre report estimate
- Soybean acres 87.5 million acres vs 86.5 million pre report estimate
- Wheat acres at 47 million vs 47.5 pre report
- USDA WASDE February 8th Report Highlights (Month Prior)
- USDA’s Estimate at the Brazilian crop came in at 156.0 mmt, down from 157 mmt last month. The problem the market found with this number is that the market wanted to see more of a 153 mmt figure. Overall the report was seen as generally bearish.
- Global Corn Ending Stocks cut to 322.1 mmt down from 325.2 mmt in last months WASDE
- Global Soybean Ending Stocks bumped higher to 116 mmt from 114.6 mmt in the last WASDE
- Global Wheat Ending Stocks adjusted down very slightly by about half million tonnes and comes in at 259.4 mmt
- US ending stocks all higher for their crops
- The USDA kept Canadian canola exports at a 7.6 mmt export figure. We are tracking below 6 mmt on actual exports right now. There is a wide discrepancy in export figures here but it should be noted where other agencies stand.
- CONAB report out Thursday February 8th (Month Prior – March 12th is the most recent update – See Above)
- Cut soybean production to 149.4 mmt down from 155.3 mmt in the January report. Brazil also lowered its soy exports for the year to 94.2 mmt from 98.5 in the January report.
- Corn production also cut 7 mmt to 201 mmt total production
- Stats Canada canola December 31st stocks came in at 12.85 mmt vs expectations in the 13.0 mmt area. Higher for the time of year last year and the year prior, but the 4th smallest in a decade overall. Not exactly abundant as the market makes it out to be. The problem will be how accurate these numbers are first off and how our usage is through the end of the year. If exports continue to lag, then the figure will be of less significance. Something to keep an eye upon
- Interesting to note that some crops came in at the tightest in a long time. Oats were a crop that stood out as well. Aside from December of 2021, oat stocks came in at the tightest in a decade.
- Peas, Durum, Lentils all worth taking a look at as well. Big question remains demand. Durum needs to get more tender business which it has been loosing out upon. Need to pick up export pace for most crops
WESTERN CANADIAN CROP NOTES
Canola:
- We hit some important sales targets for our grain marketing clients in past 10 trading days due to the recent run up in futures.. See recommendation section below. May Canola closed above the $640 level here for the Friday session.
- Crushers filling up domestically for the front months as producer selling took up much of the front month capacity. Most crushers bidding May onwards. If need crusher movement, need to build a plan around that. June/July/August is where most capacity lies within the crush.
- Canola now pricing more expensive than Australian Canola after being cheaper than them in late February and into early March. The difference between exporter bids has narrowed up significantly in recent weeks. Canola carried such a premium to Australian canola and EU canola through the first half of the marketing year. It narrowed up significantly for several week but is showing signs of building that spread again. Chart above shows most recent bids at some key export regions in Canada, Germany, Australia and England.
- Canola exports bouncing around. Week 35 numbers were dismal with what looks to be one ship leaving shorelines, the week prior, almost 250,000 tonnes was moved.
- Current export pace of 6.0+ mmt is not great overall and would be one of the lowest levels of exports in decades. See chart below for reference
- We need to grab exports on the tail end of the marketing year to maintain a reasonable carryout in the market.
- Crush is running at a very impressive pace, could hit a 11mmt record. Markets need to see exports pick up to get any sort of strength into the domestic trade (Basis).
- Canola will trade at the mercy of foreign veg oils for the time being (Palm, Soy, Rapa).
- Crusher bids still dominate but are falling closer to exporter prices, depending on the month. Most exporters sit close to the $14.00+ mark today, depending on region and Basis levels. Crushers still hold the leading bids, but the regions are getting fewer and further between and months are getting tighter.
- For a more in depth analysis on Canola Specifically, check out our Canola Fundamental report by clicking here: Canadian Canola Market Fundamentals – Q1 2024
Spring Wheat:
- Russia has been playing games with exporters here this past week, revoking some export licenses of 2 key grain exporters RIF and Aston for select cargos, and then reinstating select ones in the days following.
- Reports of Russian farmer selling slowing down due here recently. New crop will be off beginning in July and the anecdotal sentiment is towards producers willing to sit on inventories for the time being.
- Russia wheat values sitting in the $200 to $220 FOB Russia per tonne level on some recent tenders. Some reports of Russian wheat trading for as low as $200 per tonne in recent weeks for low protein wheat 11.5%.
- Saudi Arabia booked close to 800,000 tonnes of wheat in teh $255 per tonne range this week for June/July delivery
- Egypt bought Bulgarian and Romanian wheat for around $235 per tonne this week.
- China Cancelled some US and Australian wheat purchases it had committed to earlier. This has put pressure on wheat markets this past week.
- Domestic wheat bids in Western Canada touching that $8.50 range for old crop. $7.50 for new crop.
- Looks like Black Sea regions willing to dump grain here before summer. New crop will be in the system starting July 2024 so exporters looking to keep product moving.
- Canadian Wheat exports and domestic usage is still considered very strong. At the current pace of exports and domestic usage, rationing will be needed. This does not always mean price correlates accordingly, as we have seen in recent weeks. Prices have seen producers selling into them.
- Wheat exports expected to easily surpass last years levels at current pace and are on track for an 8% increase year over year. Likely not able to make that happen although as rationing will supersede this.
- Canadian wheat of good quality. 97% graded as either a #1 or #2 HRSW
- 80% had falling number above 350 seconds
- Wheat trade right now is mostly demand based. We have a good idea on global supplies for the most part.
- Forecasted wheat global and domestic ending stocks coming in at the tightest levels since the 2015/16 crop year.
- Next thing market will be watching for is crop progress in the US and EU winter wheat crops and Spring Wheat planting conditions in Europe. This will be more relevant come April / May. Start of April we will get into the regular USDA Reporting schedule for crop conditions and progress.
Special Crops
- Tunisia tendered for old crop Durum this week. Looks like Viterra picked up some of the business. $30USD per tonne cheaper than a similar tender about 2 months ago.
- Special crop markets closely watched Marchs release on acreage estimates from Stats Canada.
- Barley acreage drops to 7.1 million acres. Fits in line with some trendline averages
- Barley prices lower than last year, as with many crops. Some $5.00+ feed opportunities available central Sask. Greater as you move closer to Feed centers. Add $1.25 to $1.50 for Malting.
- Durum acres up 5% year over year. One of the largest acreage estimates in recent years
- Lentil and Pea acres up year over year but still not out of line with recent history.
- Watch prices in the coming weeks to see if we get any shift in general in acres. We could see some significant swing acres depending upon producer sentiment towards moisture and market conditions. Planting could be early in Western Canada at current pace of snow melt.
- Canadian peas will face stiffer competition going forwards into China as some Black Sea peas able to price into the region.
- Canadian red lentils also competing with a larger Australian crop. Indian lentil harvest taking place here in the coming weeks and crop is expected to be of a healthy size. Looks like higher availability for global export market
- India reduced Yellow Pea import tariffs from 50% down to 0% was extended for another month until the end of April 2024. Was only in place until end of March but another month was added to get exports into the nation. Pea bids did show some strength about two weeks ago but have toned back in recent days as the exporters square up their positions ahead of key deadlines
- Durum exports lagging behind last years pace. Canadian durum has been missing out on some recent tenders into North Africa. Durum exports have somewhat disappointed traders as we missed some key export opportunities early on due to some better than expected Mediterranean crops. New crop Durum $9.50 still available for the fall
- Durum growing regions of Canada remain parched, producers somewhat hesitant to price aggressively on new crop. Some precipitation has came through end of March and into April, producers hesitant to price as bids have fell from earlier on as well.
- Red Lentil reduced import tariffs extended until March of 2025
- Red Lentil new crop sitting around $0.32 and $0.52 for greens. Act of God coverage bids slightly lower
- Yellow Peas – Old crop yellows $12+ on the renewal of the India tariff exemption. Bids are not consistent amongst buyers. New crop $10.00 and upwards of $10.50 range. We will need to see further tariff exemptions to keep premium in the market. **UPDATE: Tariff Exemption extended until end of June 2024**
- Flax Bids in the $16.00 range central prairies. Some large divergence in bids so please look into where you are pricing. Flax bids have been picking up here recently. Speculation of a sale through the seaway made for spring and concern about Kazakh supplies and whether new EU tariffs against Russian grains will affect supplies.
- Feed Barley has picked up some ground, gaining some traction. $5.00+ bids are commonplace . Still competing heavily with US corn origination. New crop feed barley $5.00 in some cases. Big Spreads depending upon buyers.
- Feed Barley at the mercy of US corn crop prices and Currency.
Latest Key Fundamental Report Highlights
- STATS CANADA ( DECEMBER)
- March 11th we got Principal Field Cropping Areas – See above
- December 5th production estimates. Stats Canada report came in and was mostly as expected but higher than the prior report released pre harvest.
- Canola- 18.3 mmt vs 18.3 mmt pre report estimate
- Spring Wheat – 24.7 mmt vs 24.0 mmt pre report estimate
- Barley 8.9 mmt vs 8.6 mmt pre report
- Oats 2.6 mmt vs 2.6 mmt pre report
- Durum 4.0 mmt vs 4.1 mmt pre report
- Corn 15.1 mmt vs 15.0 mmt pre report
- Soybeans 6.98 mmt
- Lentils 1.7 mmt vs 1.7 mmt pre report
- Peas 2.6 mmt vs 2.6 pre report
- Flax 0.272 vs 0.290 pre report
- Most of the production numbers are higher than they were in the early days of harvest when ideas for the canola crop were floating around a high 17’s number. Same could be said for Durum and a few other select crops.
Currency – Energies – Fertilizer
- Bank of Canada Stays Put with current interest rates at the latest interest rate meeting. Prime sits around 7.2% at major Canadian banks. Hinted that we could be higher for longer. Cuts will not be significant if they do come. The Bank of Canada has also recently hinted that one could face another rate hike but it is hesitant to do so given that Canadians are feeling the pinch of higher rates.
- Canadian CPI Still “Sticky” and sits at 2.9% as of the latest announcement in February.
