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Weekly Futures Tracker
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- Canola and Wheat both post a positive trading day at Wednesday afternoons close.
- USDA WASDE and the Canadian Grain Inventories Report both influenced domestic markets this week:
- WASDE Highlights:
- Global Canola ending stocks raised slightly by 1%
- Placed Canada’s canola crop at 18.2 MMT which is higher than Stats Canada’s 17.5 MMT
- European Union rapeseed (Canola) raised to 19.7 MMT.
- Soybeans led the way lower today as the USDA Cut Soybean Crush and Export expectations. The saving grace was a lower than anticipated soybean ending stock carryout number.
- USDA lopped off 10 million bushels of soybean crush to come in at 2.29 billion bushels
- A 35 million bushel haircut came to exports of beans at 1.79 billion bushels
- Wheat stocks surprise the market and 2023/24 ending global stocks anticipated to be 7mmt lower than August estimates and traders pre report estimates. Australian, Canadian, Argentinian and EU wheat crops shrunk while Ukrainian wheat exports and production estimates rise.
- Some market analysts believe that the USDA is underestimating the size of the wheat crop in the Black Sea region.
- The 7mmt cut although did give wheat futures some life to come off of its multi year low levels.
- Stats Canada Inventories as of July 31st highlights:
- Canola inventories come in higher than last year, within range of expectations. Average estimate heading into report was 1.7mmt so came in a bit lower than expected
- Oats and Flax ending inventories come in within expectations, but quite a bit higher vs other years. Bids improve for these crops a few months out as we deal with higher ending inventories. We are also dealing with 54% and 44% less production for 2023/24 crop year as well. So higher initial carryout but much less crop anticipated to have been produced.
- WASDE Highlights:
- Areas of Canadian prairies beginning to wrap up but still lots of activity further north areas. Producers just getting into the canola crop here seriously in the past week.
- Final 2022/23 canola crush and export figures have been released. 9.96 million metric tonnes of crop were crushed in 2022/23, exceeding initial expectations as more canola was directed to crush this past year vs export. 54% of Canadian canola was crushed this past year. Year prior was 58% but the three years preceding that were all below 50%. Updated Charts below in Canola section.
- US just starting corn harvest. Barley has faced tough competition into feed rations in southern prairies as old crop US corn comes up from the United States to fill feed demand. There appears to be a levelling off in feed barley bids for the time being while markets try to catch a glimpse of what early corn yields look like. Feed barley and Corn neck and neck for cost as of this week.
- Most oat buyers in the $5.00+ range for new crop Some $6.00 bids out there. Durum bids $14.50 to $15.00. We know these crops will be much smaller than last year.
- Flax bids $16.50 ish. Looks to have stronger demand further out.
- Canary Seed bids $0.45
- Red lentils hovering around $0.40
- Spring wheat is a major quality game this year. Some areas will not see any issues but areas with late season rains have had some quality degradation post rains. Elevators are needing to check for falling number and a higher than normal percentage of wheat has been coming in with sprouts.
- Malt Barley has been subject to a similar story as well. High Chit after the late August and early September rainfall events caused some malt issues.
- Bank of Canada leaves interest rates untouched on September 6th. 5.00% overnight rate which leaves prime at Canadian chartered banks at 7.2%
- August 15th, inflation came in at 3.3% vs June’s 2.8%. Analysts were estimating a 3% rise, so inflation did come in slightly hotter. Grocery costs were up 8.5% in July.
Prime Rate History – Chartered Banks Canada
Canola 6 Month Chart –
A Bollinger Band® is a technical analysis tool defined by a set of trendlines. They are plotted as two standard deviations, both positively and negatively, away from a simple moving average (SMA) of a security’s price and can be adjusted to user preferences. When the price continually touches the upper Bollinger Band, it can indicate an overbought signal. If the price continually touches the lower band it can indicate an oversold signal. (Investopedia)
Spring Wheat 6 Month Chart
50 Day Moving Average – 100 Day Moving Average (Yellow) – 18 Day Moving Average (Red)
$7.82/Bushel – Up $0.12 USD / Bushel Past Five Trading Days
- Spring Wheat ending stocks come in at the lower end of the 10 year range.
- Lower stocks and production
- Canadian Wheat supply at 22.1mmt which is down 14% year over year.
- Domestic spring wheat prices falling hard. Sub $9.00 bids commonplace in prairies. Basis improves closer to export/milling A mix of cheap global wheat, harvest pressure domestically and a general weaker market sentiment for the past month.
- Quality is going to be a concern in northern and eastern prairies which have been getting the most rainfall all year here in recent weeks.
- Global wheat values remain relatively cheap as major exporters all want to move some of their new crop. Euro / Russian wheat is still weighing down the markets.
- Wheat futures loosing interest in the ongoings in the Black Sea. Funds have been shorting the market lower in the past month after the end of the Ukraine/Russian trade corridor.
- There has been extensive attacks on each others export positions in recent weeks although wheat futures tend to be turning a blind eye to the reports for now.
- Markets instead turning to see if exports actually truly get hampered. Scarcity has not been an issue yet and markets are less inclined to buy headlines in recent weeks.
- Flax stocks come in quite high to end out 2022/23 crop marketing year. Majority of the crop is held in farmers hands and the remaining stocks have been tough for buyers to get thier hands on.
- Canadian Canary Seed stocks set to become quite tight compared to recent years.
- Less acres for the crop but the added stressor of anticipated low yield on the crop has the Canadian crop sitting at a 4 year low for ending stocks. Prices have already responded and most bids sit in the 40 cent range or greater today.
- Canary seed come in at a very small 127,000 tonnes of production. Bids have already gotten to be quite strong. $0.45 cent range.
- Red lentil bids picking up slightly so far in western Canada. Both Turkish and Indian bids ticked up here in recent weeks. Indias monsoon season has been dry and Australia taps have turned off a bit as well
- Green lentil bids move higher since the start of August, market sentiment has been stronger for these varieties.
- Durum bids moving sharply higher in recent weeks at inland facilities across Canadian prairies. Bids picking up $2 in just a few short weeks. Durum will be interesting as it might be a short crop in lots of regions globally. Importer affordability is the main question although, and the spread between other wheat varieties is at a very wide gap.
- Durum quality and quantity has been a wreck in many of the worlds largest markets. Italy has major quality issues and Canada will have quality and quantity issues as well.
- 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. Canadian Faba acres still relatively low with just 79,000 acres planted this year. Fabas mostly been pricing themselves into feed markets in recent years and export has not been substantial
$755.30/ Metric Tonne – Up $3.30 / Tonne – Past 5 Trading Days
Canadian canola production figure came in close to expectations at 17.6 mmt of total production.
See updated crush figures below, just released last week.
Canola crush comes in at just over 8 million tonnes for the 2022/23 crop year. The number was just released this past week. One of the lower export numbers as most of our canola went to crush and expensive when competing on the world stage. Crush has continued to be relatively strong while margins remain strong for the domestic crop. Exports are the real issue. Canada has had a hard time with export business this marketing year, having to compete with a good crop in the EU last year and a massive crop in Australia being offered at cut rates to the Canadian crop. It is also important to note, that exports do have a limit on the old crop as carryout’s will be tight, so naturally crushers have been paying to keep their facilities full and exporters have a more challenging time to compete as global values are lower.
Ag Canada forecasting 9.5 mmt old crop (2022/23) crush for the year. It came in higher than that (9.96mmt).
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.
Very important to understand where you sit on your marketing plan and when you want to move your crop.
Canadian dollar sitting $0.737
Bank of Canada raised interest rates by 0.25% on the July 12th announcement. Interest rates were stayed in the most recent decision. Prime at 7.20% for most financial institutions. This places CCGA or APP interest bearing portions at 6.45%.
Important to keep cost of carry for your inventory in mind. Have your advisor calculate cost per bushel carry for your own situation. Some instances, Canola cost of carry is $0.10 or greater per month to carry the inventory.
Most recent CPI inflation numbers released came in at 3.3% in the August report vs expectations of 3%. Next CPI figures out September 19th.
Weather – WPC 5-7 Days Forecast
PRICES ARE IN UNITED STATES DOLLARS. PRICES ARE ALSO FOB US GULF COAST FOR BOTH PHOSPHATE AND UREA. 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.