Western Canadian Market Report – December 15th –

Weekly Futures Tracker

Important Dates – Click Here For Report Release Schedule

Market Overview

• Wheat prices pick up about $0.20 per bushel in the past week.  Average central prairie bid sitting around the $11.40 mark.
  • At the same time last year, wheat was sitting at around $12.50 per bushel central prairies.  This was prior to Russia’s invasion of Ukraine when prices spiked higher yet.
  • Average canola bid sitting just over $19.00 at line companies and about $0.50 better at crush facilities.
    • Last year, Canola was at nearly $22 per bushel already. We are sitting far below that figure but with a much better crop harvested across the prairies.
• Other Special Crop Prices
  • Flax sitting in the $18 to $20 range
  • Feed Barley still touching $8 but pushing lower into the $7.50 range in many places
  • Oats in the $4.00 to $5.00 range.  Weaker bids northern Saskatchewan and Alberta. Improving bids in Southern Manitoba.
  • Red Lentils still trading $0.35 southern prairies. Down from $0.45 last year
  • Yellow Peas around $12.00 to $12.50 down from $18.50 same time last year.
  • Green Peas at $13.50 to $14.00 range, Down from $16.00 last year.
• Bank of Canada increased the cost of borrowing by 0.50% in last weeks interest rate announcement. Overnight policy interest rate now sits at 4.25%.
  • Prime rate now pushed to 6.45%
  • Bank of Canada expected to pause or slow the rate of hikes in the coming months.
• US Federal Reserve increased their policy interest rate this week by 0.5% as well.
  • US Fed said it will likely slow the rate of hikes going forwards but still mentioned that more were likely to come.
• USDA WASDE REPORT Highlights – December 9th
  • Report was very quiet
  • Soybean and Wheat stocks came in flat for USA, Corn stocks increased slightly
  • South American figures left untouched
  • Global Corn stocks dropped 2 mmt, Soybeans up slightly by 600,000 tonnes, wheat dropped by a small 500,000 tonnes.
• Canola trading about 2/3 of the way up between its 3 month trading range.
  • Futures sit $860 range, up from its 1 month low of $799 on the March futures and down $25 per tonne from its high set November 16th.
  • Most volume is now trading on the March contract as January futures will wrap up shortly.
• Spring Wheat futures roll over to the March contract as the December is now done.
  • Spring wheat set a three month low on December 6th of $8.90 per bushel and has picked up about $0.20 since then. Three month highs were set October 10th at $10.29 per bushel.
  • Spring wheat futures, and wheat futures in general having  a more challenging time finding bullish stories to stimulate the markets interests
  • Yes there are some major bull stories that can be written but the market looks to be putting off the “could be” portion of the trade for now.
    • The market is focused on the big crops coming out of Australia and Russia right now and discounting US drought concerns for their winter wheat acres as we will not see the true damage for at least 4 or 5 months.
• 93% of all western Canadian HRSW graded as either a #1 or #2 wheat this year.
  • 79.3% hit the #1 slot, 13.6% hit the #2 slot.  1.6% came in as a #3 and the remainder was taken up by lower quality. (Grains Canada)
• Of the #1 wheat, market average is sitting at 14% protein and the #2 is averaging 13.6%. The top two varieties grown this year were AAC Brandon and AAC Viewfield.
• Ukraine and Russia grain export corridor now open until mid March.
• Statistics Canada report of Principal Field Crop Production – December 2nd with its 2022 harvest size estimates for the recently harvested crop.
  • Average estimates heading into last Friday’s report were for a 19.2 mmt canola crop and 25.9 mmt for spring wheat
  • Real figures for Canola came in at 18.2 mmt and 25.7 mmt for spring wheat.
  • Canola’s estimate partly shocked the market and let it trade independent of weak soybean oil for a few days
• See chart above for estimates and lower in report for a quick summary of the release.
• According to the USDA FAS, Canadian wheat is about middle of the pack in terms of global pricing at $371/tonne.  Argentinian wheat FOB pricing came in the most expensive globally at $397 per tonne, Russian wheat the cheapest at $316 per tonne.
  • Russia is moving its wheat globally as it has the lowest price for the near term.  Buyers are skeptical to go to far out with Russian wheat due to political instability.
• Canadian Rail movement is keeping a decent pace so far.
  • Markets have not seen major rail movement problems for a few years now, although last year we did have minimal grain to move.
• Much of Saskatchewan and Alberta are in the classification of drought.. The exception lies within some regions of south eastern Saskatchewan and into Southern Manitoba.
  • Producers will be in need of good snowpack but will be looking more for spring precipitation to recharge soil moisture conditions.
• Massive portion of the US Midwest is in drought classification as well due to the taps turning off in recent months.  As of Mid October, there was only one drier time (2012) in data dating back to the year 2000.
• 62,000 tonnes total of US corn has made its way into Canada through the first 17 weeks of the crop year. This is up from 26,000 tonnes same week last year. Important note, 62,000 tonnes was also the reported number in week 15.
• Check out the Recommendation tab for all current grain marketing recommendations.

Prime Rate History – Chartered Banks Canada

Prime rate Got Bumped to 6.45% Last Week

Canola 3 Month Chart

Spring Wheat 3 Month Chart

Spring Wheat

$9.21/ Bushel – Up $0.20 USD / Bushel Past Five Trading Days 

• Statistics Canada report figures came out near estimates.
  • One of the bigger wheat crops for Canada, but not a record.
  • Record crop set back in 2013
• Canadian wheat prices have been loosing some ground on the combination of a few factors
  • Canada remains an expensive alternative to Black Sea and Australian wheat
  • Wheat markets in general pulling back over lack of bullish news to bring them back to the earlier highs.
• Wheat headlines from around the globe:
  • Australia taking off a 36.6 mmt crop. 1% larger than last years record crop.
  • Russian and Ukrainian grain will continue to ship unencumbered through mid March due to the safe passage corridor extension.
  • Argentina drought devastating wheat crops. Set to put out the smallest crop in 7 years. 40% smaller than last years crop size.
  • Argentina also considering restrictions on exports of wheat to ensure sufficient domestic supplies.
  • Ukraine winter wheat planting fell by 40% as well due to major issues with planting a crop during war.
  • US winter wheat producers planting into tremendously dry soils.  The driest September on record stateside. Many producers scrapped winter wheat planting plans already and hoping for a recharge of soil moisture in the spring.
  • Over 320 million acres of cropland in the United States are experiencing some sort of drought.
  • Canada and United States had a fairly decent sized wheat crop.  The concern is for next year due to the lack of moisture available.

Fall 2022                            UNITED STATES                         Fall 2021

Special Crop

• Canadian Durum quality comes in very nice. 82% grading as either a #1 or a #2
  • 62% as a #1 and 20% as a #2
  • #1 came in at 14.3% protein and #2 came in as 15% protein.
• Oat production expected to surpass 5 mmt.
• Canadian producers just can not compete with Kazakh or Russian flax in the global marketplace.  Canadian flax down to $20 per bushel range.  Will have a tough time making upwards momentum if other main supplier keep market well supplied.
• Russia becomes the worlds largest pea producer, taking away the title from Canada
• US mustard crop expected to have came in much larger than last year, reducing import requirements.
• EU imports of Canadian mustard lower for the crop year. Higher volumes coming from Russia and Ukraine.
• Argentine export pace of Canary seed remain strong
• Canadian mustard supplies up year over year, hesitant selling from producers is keeping product from the marketplace and keeping bids supported.
• The combination of Australian and Canadian red lentil crop size will be third largest on record.
  • This is using reported figures.  Canadian red lentil crop size still a partial unknown at the time
  • Aussie lentil crop could come in large but there is reports that due to the recent heavy rains in some regions, there is vegetative growth being favored over pod set.
• Late season Monsoon rains helping entice Indian Rabi crop acre plantings.
• Prices sliding for Indian Peas and Desi Chickpeas for the season.  Could discourage additional acreage of the crops this year.  Yield prospects up on decent growing conditions.
• Flax prices into Euro regions remain subdued and limiting Canadian crop markets

CANOLA

$860.70 / Metric Tonne – Down $0.20 / Tonne – Past 5 Trading Days

Canola futures picked up significant ground in the first two weeks of December but flatten in recent days, reluctant to push higher for the time being. Stats Canada’s recent cut to canola expected production has been a supporting factor for the futures, keeping them slightly independent of other veg oil futures.

Crush margins remain strong and have every incentive to run a full crush program for the year but we need to remember that the crushers can do max 10.5 mmt, maybe push it to 11mmt.  We need to find a home for the remainder of the crop. 2.64 million tonnes of crop has been exported (Week 17), about the same as last year (2.37 mmt, Drought Year). The year prior we sent 3.7 mmt out the door already by week 15.

Canadian canola still holds a premium over Aussie Canola.  Australia has the freight advantage into Asia and is taking off what is expected to be a large crop, although they do face some crop quality problems due to lingering water issues in some regions.

Canola crushers remain the predominant purchaser of Canola in many locations. Strong crush margins are keeping crushers at an advantage being able to source what they need by keeping bids slightly higher. This does have some stipulations although such as month and region.  Some areas of prairies remain without access to crush facilities.

Depending upon location, certain crush facilities are filling up for certain front months.

Below is a illustration of potential production figures (Red) and historical production (green).  The three red bars illustrate what production would look like with a 38, 40 and 42 bpa national yield average on estimated seeded acres. 42 would be a national record, not expected to be reached at this point.

Statistics Canada put out 18.17 mmt figure.

5 year calculated average for 2020 and prior is 39.4 bushels per acre

Canadian Pacific and Canadian National Railways Movements – Ag Transportation Coalition

CANADIAN DOLLAR

The Bank of Canada increased overnight borrowing rates for interest rates in the December announcement. Interest rates jumped by a full half of a percentage point to come in and sit at 4.25%

Prime rate at most national banks sit near 6.45% now.

Weather – WPC 5-7 Days Forecast

Canadian Soil Moisture 

Last Week’s Data – Technical Issues