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Weekly Futures Tracker

2023 Report Schedule – Important Dates – Click Here For Report Release Schedule

Market Overview

Markets take a major step back in the last half of the week as bearish news breaks on the extension of the Russian Ukraine Grain Deal.
- All commodities trading lower for the past five days.
- July Canola is up $15 per tonne since May 1st although.
- 2022 July Canola in the same timeframe last year moved up $2 per tonne in the same timeframe last year, but posted a wild $98 per tonne trading range in the 13 trading days from May 2nd to 18th last year.
Planting advancing fast across Canadian prairies.
- Very few delays weather related during the seeding campaign so far this spring. Lack of rain events across the prairies has producers able to keep the wheels moving. Some areas already wrapping up but most producers need another week to 10 days to get the crop in.
- Very dry in a wide swath of Canadian Prairies and the drought region is growing. Many producers will be looking for a significant rainfall event here in the coming 10 days to help this crop get up and off to the races.
- Posted North American drought monitor below that highlights the continent as a whole.
Russia and Ukraine have agreed to another 60 day extension of the Black Sea Grain Deal.
- This was primarily behind yesterdays and this mornings drop in futures prices.
- The agreement was already likely to go forwards, but the confirmation of the news was the big nail in the coffin for any risk pricing built into the market regarding the potential closure of the gateway.
- As we go forwards, markets are less likely to focus upon this agreement as Russia appears to need this agreement despite saying they do not. Russia has warned it would step out of the agreement several times but has renewed every time.
United States Wheat Quality Council tour taking place this week. (UPDATE: Wrapped Up Near Noon, Wheat Tour Projects 178 million bushel crop for Kansas vs USDA’s 191 million bushels)
- Day three of the tour takes place today which will wrap things up.
- Day two highlights: Day two wrapped up in Wichita Kansas. Yield average from over 270 fields was a measly 27.5 bushels per acre. Tour participants stated that it believed that was high on the yield side of things. It mentioned they used a USDA formula for counting yield estimates and that it did not account for light of short heads that would not make it into the harvester.
- This accounts for the fields that would actually make it to harvest. The tour did announce that many fields will be abandoned.
- Final Yield Estimates will be released this afternoon.
Many of the “Big Reports” out of our way.
- We have already had the USDA May Report, Renewal of Black Sea Shipping Corridor, US and Canadian Acreage Intentions and Stocks Reports, Turkish Election (Which resulted in a Runoff, May 28th will decide government)
- We will be turning mostly to a weather market now. South American crop is known
  - Bad crop in Argentina for soy, good crop in Brazil. EU crop looks good except for some exceptional drought in Spain and southern France and Southern Germany/Italy. North looks good. No major issues in Ukraine and Russian weather stories.
  - Most of the focus will turn to North American crop and other key statistics such as Exports and Usage.
- North American crop has some problem spots already brewing but timely rains will take the bulls out and keep the bears satisfied in this market. No major bullish money flow is present in the commodities right now.
Canadian grain stocks released this last week,
- Chart below. Grain stocks are mostly higher than last year due to the massive drought of 2021.
- Take a look at the change from 2021 to 2023.
- Oat stocks very high, same goes for flax. Lentils, Canary and Durum take a dip.
Local Markets:
- $17.50 canola achievable in few select locations. Less after this weeks drop.
- Wheat took a massive hit this week. Some $10.50 old crop was available earlier in the week. Still is in a few strong basis regions.
- Other crop bids not showing much movement for the week.
  - Feed barley bids fell. $6 new crop $7 old crop
  - Red Lentils old crop in the $0.36 area
  - Canary Seed bids $0.39 region
  - Flax having a tough time breaking above $16.00. Many bids lower than this
  - Oat specials at $3.50 to $3.75 northern prairies. Some $4.00 southern prairies.

May 9th Report Release Date

Prime Rate History – Chartered Banks Canada

Canola 6 Month Chart –

50 Day Moving Average – 100 Day Moving Average (Yellow) – 18 Day Moving Average (Red)

Spring Wheat 6 Month Chart

50 Day Moving Average – 100 Day Moving Average (Yellow) – 18 Day Moving Average (Red)

Spring Wheat Fund Net Positions

Spring Wheat

$8.33/Bushel – Down $0.13 USD / Bushel Past Five Trading Days

Canadian wheat bids suffer from recent weakness in the futures markets
- Old crop trading range pretty wide depending upon region. Closer to mills paying $11.00 earlier in the week, this has backed off slightly
  - Inland facilities triggering $10.50 earlier this week.
- Wide swath of bids and basis levels vary significantly based upon region.
- US Spring wheat is facing delayed planting, but expect that to catch up
- US winter wheat conditions remain very poor, see chart below. Near record poor conditions.
Spring wheat mostly in the ground in Western Canada. Producers onto Canola in many regions.
Massive amounts of spring wheat being planted in western Canada this spring.
Russia had been trying to ruffle feathers saying they are leaving the grain export deal in May. They did renew for another 60 days which gets us to Mid July. So essentially the grain deal is renewed until Russia and Ukraine begin taking off their new crop, which they will be looking to export large amounts again.
- Russian scare tactics have been having limited affects on the price of wheat as of late.
- Russia has lots of old crop wheat to sell and they have been selling it very cheap $275 to $300 USD per tonne. New crop will be hitting the market within 70 to 90 days.
Canadian wheat not pricing itself well into global markets as we are more expensive than Russian wheat, which is nothing new, even prior to war times.
- Canadian wheat sells itself based off of quality. Russian wheat is typically of lower quality but producers have an abundance of the crop. It is sometimes hard to compare FOB bids as wheat comes with so many different characteristics.
- According to the USDA, Global Wheat Stock to Usage will come in tighter for 2022 crop year
  - Russia produced a massive record sized wheat crop of over 100mmt, upwards of 20mmt above average.
    - Russia’s main concern is shipping this crop out, despite the games they try to play with the grain export corridor.
  - Global demand is always a underlying tone in markets for overall commodity demand.
    - How much consumption will actually take place?
    - China is expected to be overtaken by India in terms of total population by the end of 2023 at the latest.
  - Ukraine winter wheat planting fell by 40% as well due to major issues with planting a crop during war.
- Updated Latest Winter What Conditions – United States

SPECIAL CROP

Yellow pea prices have fell by about 10% since Stats Canada survey took place, while green pea prices are up about 15%.
Australian pea exports have been increasing in recent months. Mostly taking off towards China.
Yellow pea pricing into China is softening while green pea prices appear to be holding stable
Australia fulfilling Middle Eastern needs for Faba Beans. Does not bode well for Canadian Faba exports.
Special crops take the rear seat in the upcoming planting campaign as more producers allocate more acres towards Canola, Spring Wheat, and Barley.
- Lentil, Oats, Flax and Sunflowers all significantly lower
- Pea acres coming in at just 3.2 million acres. 150,000 acres below last year but down nearly 1 million acres from 2019 and 2020 when roughly 4.3 million acres were planted.
USDA predicting a 9% increase in pea plantings.
Australia increased their pea crop to 341,000 tonnes, up 20% year over year.
Analysts expecting lower Flax and Oat acreage for spring of 2023 due to new crop pricing opportunities.
Canada remains globes cheapest source of oats right now. Heavy stocks means there will be carryout.
Canadian producers can not compete with Kazakh or Russian flax in the global marketplace. Canadian flax hovering $16 per bushel range. Will have a tough time making upwards momentum if other main supplier keep market well supplied.
EU flax prices lower and good supply limiting Canadian exports into the region.

CANOLA

$709.10 / Metric Tonne – Down $10.90 / Tonne – Past 5 Trading Days

Canadian Canola futures markets took a hit this week, on sympathetic trading regarding the Black Sea grain deal. Some very dry conditions in Western Canada have canola producers concerned about upcoming precipitation events. Timely rains, if received, will be required for the crops to achieve top end yield as soil moisture post planting is very limited in many regions.

Canola up 200,000 acres for the upcoming crop year.

Ag Canada forecasting 9.5 mmt old crop (2022/23) crush for the year. March numbers released and hit a marketing year high. 923,000 tonnes crushed.

It is expected that at least some of the new crush demand being built in western Canada will be online to take part of the 2023/24 canola crop, although it remains exactly unclear how much will be available. Even an extra few hundred thousand tonnes of capacity at sometime during the year will take off some of the burden of finding an export market for the unprocessed commodity

Carryout domestically will be tight but many crushers have a good portion of their forward needs covered off for the time being. That places Canadian canola trying to compete into the global market where bids are lower. Canola markets would be soon expected to turn focus to domestic new crop. Plenty of production risk is at play for the year ahead, as there is every year.

Total usage of Canola in Canada for domestic usage and exports, although higher than last year, is much lower than the past five years. (See Chart Below) Lower carry in stocks is part to do with the lower consumption as no new crop was available until early September.

Board crush margins are very good. Over $200 per tonne in some instances as prices for incoming product devalue while meal and oil share remain strong. Crush margins at the same time last year were hovering around $100 per tonne. Now this all is just a proxy analysis as we truly can not gauge what a crushers back end sales levels may be.

We also need to understand that crush is filling up. Crushers are getting their short term needs taken care of and many line companies have become the main buyer of canola in recent weeks. Export bids are naturally lower than crush bids as export values onto the global market are significantly lower.

Very important to understand where you sit on your marketing plan and when you want to move your crop.

CANADIAN DOLLAR

United States Federal Reserve raised interest rates another 0.25% May 3, 2023. Rates now sit at the highest level in 16 years.

April Inflation Came in at 4.4% in data released May 16th. Prior to this, March Inflation came in at 4.3% down from 5.2% February. Down from 5.9% in January and 6.3% December. Central banks are having a tough time using their tools to wrangle inflation down to target levels of 2% but appears to be on the corrective path.

Energy prices dropped for March, but expected to be up in April. Energy is a big part of the basket of goods used to determine inflation

Mortgage inflation costs are the big line item of the report. Mortgage interest costs are up 26.4% year over year.

Food prices up 9.4% year over year

Bank of Canada left its overnight borrowing rate untouched April 12th. Next CPI Numbers May 16th Next rate decision is June 7th.

Prime rate at most national banks sit near 6.7% now.

Weather – WPC 5-7 Days Forecast

Canadian Soil Moisture – Year over Year

2023

2022

2021

2020

PRICES ARE IN UNITED STATES DOLLARS. PRICES ARE ALSO FOB US GULF COAST FOR BOTH PHOSPHATE AND UREA. SO NEED TO FACTOR IN THE FOLLOWING: CURRENCY, FREIGHT, MARGIN

It is also important to note that these are not highly liquid markets(Fertilizer). They are meant to provide a price direction indication rather than a firm price. Need to factor in the above variables.