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
- Link to June 27th Statistics Canada Acreage Full Coverage
- 2024/25 Crop Year Recommendations – Click Link
- At the close – Corn, Soybean and Wheat futures mostly lower. Canola and Soybean Oil higher.
- Canola found some independent strength alongside soybean oil. EU Rapeseed and Palm Oil higher as well, helping support the cause.
- Corn traded lower immediately after the report on higher than anticipated seeded acreage.
- Soybeans could not hold onto strength found initially after the report and ended up drifting lower into the close.
- Bearish report in general if looked at cohesively due to larger than expected corn acres, slightly less than expected soy acres but June 1st stocks were all a bit larger than anticipated.
- USDA Crop Acreage Report released June 28th 2024 – Highlights:
- Corn Acreage came in higher than expected. 91.5 million acres vs 90.34 pre report estimates
- Soybean Acreage came in lower than expected. 86.1 Million Acres vs 86.75 pre report estimates
- Wheat acreage came in slightly lower than expected 47.24 Million Acres vs 47.66 pre report estimates. Spring wheat was 11.3 million acres of this total and right near expectations.
- For Some Smaller, less covered crops by the news wires:
- Canola area came in at 2.663 million acres for US plantings vs 2.344 million acres last year.
- North Dakota is essentially where all the canola is grown. 2.05 million acres in North Dakota alone. Washington and Montana make up the rest of acreage.
- Flax Acres in at 140,000 all in Montana and North Dakota. 178,000 last year
- Pea acres up 1.03 million acres vs 966,000 last year
- Chickpea acres 502,000 acres vs 372,000 last year
- Lentil acres 836,000 vs 546,000 last year
- Other notes from the report: June Stocks released today as well
- June 1st stocks all came in above estimates but not far off from expectations. June 1st corn stocks at 4.99 billion bushels vs 4.10 last year. Soybean stocks 970 million bushels vs 796 million bushels last year. wheat at 702 million bushels vs 570 million bushels last year.
- Overall June 1st stocks look fairly heavy, but the market has been working with this notion all year in United States, so none of this comes as much of a surprise
- Statistics Canada Acreage Release on June 27th:
- Wheat: Saskatchewan Producers Reported no change in wheat acres year over year at 14.2 million acres. The decreases over year came from a drop of 1.6% drop in wheat acres in Alberta and a 1.4% drop in Manitoba. Spring wheat acres were down 2.77% year over year but still higher than the 5 year average
- Canola: Canola acres came in high end of pre report estimates and significantly higher than early planting intentions of 21.4 million acres. Canadian Producers reported a total planted acreage of 22 million acres, an extra 600,000 acres give or take. Despite this, canola managed to hold onto a gain for the remainder of the trading day following the report release.
- Durum: Durum acreage came in very close to estimates pre report, no major surprises here. Durum acreage came in at the highest since the year 2000. Durum acreage definitely on the higher side but as expected.
- Full coverage of the Statistics Canada report can be found by clicking here
- Markets showing lack of interest in buying this up as new crop demand is not present yet. Only 6% of the anticipated 2024/25 new crop corn forecasted to be exported has a home to ship to once fall comes around. Generally about 10% to 20% is typically booked by now.
- Same issue for soybeans. Only 3% of new crop sales are on the books vs 15% to 25% typically being purchased by now in recent years. Traders wondering when this demand will arise.
- Australian crop conditions improving in Western regions with some recent rainfalls. Western Australia is the largest canola production region in Australia. Longer term forecast looks dry for the coming weeks, but some timely “Million Dollar” rains have hit recently to keep worry at bay for the time being. Will provide further updated reports as they transpire
- May had the bullish factors of Russian Frost, Australian Dryness, Canadian Dryness. The Russian crop was chopping a few mmt off of its size each week, sending markets higher. Canada was set to plant into some dry conditions once again. As the month of May progressed, US and Western Canadian, Australian moisture prospects all improved. June has proved to be a month of mostly lower grain prices as these worries have mostly subsided.
- Russian crop starting to come off. Mixed results. Early prospects at start of week were looking to be better than expected, then by the end of the week, producers began to find some worse than expected fields. Most analysts sticking to earlier estimates and not making any large revisions yet for the crop.
- Turkey banning wheat imports until October to help control domestic prices. Turkey is typically Russia’s largest wheat importer.
- Russia imposed a “State of Emergency” early June for the 10 regions affected by the Frost and Drought earlier in May. This is what drove the markets higher for the month of May and has been put on the backburner for the time being as markets pullback.
- US wheat crop coming off in Kansas, Oklahoma regions. The crop coming off with better yields than other years. Harvest pressure affecting pricing as well.
- European Union released their tariff guidelines in May for Russian and Belarussian grain imports. As of July 1st it is being reported that cereal crops (wheat, barley, ect) will be subject to a 95 euro per tonne tariff into the EU and oilseeds will be 50% tariff.
- Frost in parts of Germany and Poland late April / Early May has private analysts down to around 17.8 mmt. Last year around 20mmt
- The narrative has already begun that EU will need to import around 6mmt of Rapeseed/Canola for the upcoming campaign. This past year Canada missed out on most EU business in favor of Ukraine and Australian origin of cheaper origin.
- Recommendations Page Updated at Bottom of Report
- North American producers will welcome India’s extension of the Yellow Pea tariff exemption. Yellow pea imports will remain exempt from import duties until October 31st, 2024. Moving the exemption into the new crop season. Domestic yellow pea bids have increased as a result.
- Desi chickpeas will now be exempt from tariffs until March 2025.
- Australia has turned to planting more Desi Chickpeas this year, especially in Western Australia. Acres up 80%
- Australia is expected to plant a record 885,000 acres of lentils
WESTERN CANADIAN CROP NOTES
Canola:
- Canada will be working hard to pick up some of the shortfall in the European crop, much of this business we lost out on last year to Australian canola due to us being overpriced in to our secondary markets.
- Canola moves seasonally lower in recent weeks. Markets appear satisfied with the state of the current Western Canadian crop despite some heavy rains in particular areas such as Northeastern Saskatchewan and northwestern Manitoba. The crop overall has been missing some warm temperatures and is generally viewed as “late” in many regions due to unfavorable temperatures.
- We hit some important sales targets for our grain marketing clients Mid May due to the run up in futures from the February lows. See recommendation section below. July Canola only has a bit of trading time left before needing to be rolled or priced.
- Crushers filling up domestically for the front months as producer selling took up much of the front month capacity. Most crushers bidding July onwards. If need crusher movement, need to build a plan around that. July/August is where most capacity lies within the crush. Be cognizant of export and crush capacity as we get closer to the dates.
- Canola global pricing below. Canadian Canola moved cheaper than Australian FOB.
- Canola export current pace of 6.5+ 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. Looking like we will land around that 6.5mmt level for exports. Aside from 2021/22 drought, this will be our worst export season in well over a decade.
- Crush is running at a very impressive pace, looks like we will surpass and hit a 11mmt + record.
- Crushers hold the winning bid for new crop 2024 harvest
- For a more in depth analysis on Canola Specifically, check out our June 2024 Canola Fundamental report by clicking here: Canadian Canola Market Fundamentals – June 2024
Spring Wheat:
- Wheat markets focused on the ongoing US Winter Wheat crop harvest which is progressing well and looks like it will come in as expected. No major surprises as of yet.
- For the Majority of May, Russia / Black Sea weather was the driver of wheat markets. Some significant frosts in Russia in first half of May causing some havoc with crop conditions. Now dryness in the same regions have been drying and lack of rainfall during some critical crop growth periods. The wheat crop harvest has begun and initial yields are mixed.
- Private analysts calling the crop anywhere from 79 to 85 mmt. Was closer to 93mmt earlier in the year. The USDA posted 91.5 mmt last years crop, the year prior was argued to have been higher and closer to that 100 mmt mark unofficially. So important context when looking to compare crop sizes.
- Indian stockpiles of wheat lowest in 16 years. This week the nation stated that they will not remove import tariffs and will look to bridge the gap in other ways. It was widely speculated up until a few days ago that India would enact certain measures to entice more wheat into the country. India signaling to the market that it will not enact any special measures to shore up stockpiles.
- US winter wheat crop coming off good without much delay. Looks like a slightly better than expected crop. Harvest pressure.
- Russia’s ministry of agriculture reporting that 830,000 hectares or over 2 million acres of crop were lost due to the multiple frost events of the first half of May. Privates saying at least double this. Russia called a state of emergency in many states to help producers have easier access to funding.
- Forecasted wheat global and domestic ending stocks coming in at the tightest levels since the 2015/16 crop year.
Special Crops
- Mediterranean region durum harvest underway. Still looking for consistent new crop Durum pricing from the area. Once we know this crop size and price indications, the rest of the weight will be put onto the shoulders of the Canadian Durum crop. Looks like more Durum acres in Canada and United States but we know some issues with the Durum crop overseas. Lots of the global durum pricing waiting to see how Canadian crop plays out.
- Yellow Pea and Lentil Acreage expected to grow in Canada for the marketing year. The pulse crops are showing some excellent return potential for the 2024 cropping season if producers can bring it to yield at harvest.
- Canadian peas will face stiffer competition going forwards into China as some Black Sea peas able to price into the region. Some of these peas were affected by early May frosts.
- India reduced Yellow Pea import tariffs from 50% down to 0% was extended for several months and now sits at October 31st, 2024. Was only in place until end of March but another month, and then another, was added to get exports into the nation.
- Durum growing regions of Canada have got some recent precipitation but will be dependent upon some key rains following planting, producers somewhat hesitant to price aggressively on new crop. Late June, large areas of the Durum region got flooding rains. Will need to see how that plays out.
- Red Lentil reduced import tariffs extended until March of 2025
Currency – Energies – Fertilizer
- Prime sits around 6.95% at major Canadian banks.
