Western Canadian Market Report – November 11th

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Western Canadian Market Highlights

  • Local grain markets jump higher following Tuesdays USDA WASDE report. Key Highlights shared below:
    • Global Corn ending stocks increased from 301.74 mmt to 304.42 mmt, higher than trade estimates of 300.8 mmt
    • Global Soybean ending stocks were lowered to 103.78 mmt from 104.57 mmt in last months report.  Markets were caught by surprise with this one as traders were actually anticipating an stock increase to 105.5 mmt.
      • This helped boost soybeans fortunes as it recently hit a 10 month low coming into the trading week.
    • Global Wheat figures were dropped to 275.8 mmt from 277.2 mmt in last months report. Traders were expecting to see atleast 276.5 mmt in this months report.  This ended up being a positive force for the daily trade and added further fire to wheat markets, which have been on a tear lately.
  • USDA also dropped 2021/22 Argentinas soybean production by 1.5 mmt to 49.5 mmt. Brazilian output was untouched at 144.0 mmt.
    •  Brazil had its old crop bean production pumped up by 1 mmt to 138.0 mmt for last years crop.  Argentinas was left unchanged at 46.2 mmt
    • Simply looking year over year, the USDA is expecting a 9.3 mmt boost of soybean production from the two South American behemoths.  This equates to a 5% boost.

Brazilian Soy Production – CME GROUP

  • The United States seen its own corn and wheat stocks come in just slightly above market expectations and soybeans came in a few hundred thousand bushels smaller.
  • US soybean total production came in less than last months 51.5 bpa estimate and landed at 51.2 bpa,  Last year it closed at 51 bpa even.  Corn production came in at a yield estimate of 177.0 bpa vs 176.9 trade estimate. 171.4 bpa.
  • November Canola rolls off the board and January futures are now the front month.  It did not take long for January futures to take its shot at the $1,000 per tonne mark, stacking local futures at well over $23.00 per bushel at many delivery points.  Canola had faced a tumultious week leading into the WASDE report, being held back by other global oilseeds.
  • Canada is by far the worlds highest cost exporter of wheat with FOB export bids coming in at $406 per tonne vs $314 in Argentina. Canada is essentially pricing itself out of much new export business. See wheat section below.
  • USDA also dropped 2021/22 Argentina’s soybean production by 1.5 mmt to 49.5 mmt. Brazilian output was untouched at 144.0 mmt.
    • Brazil had its old crop bean production pumped up by 1 mmt to 138.0 mmt for last years crop.  Argentina’s was left unchanged at 46.2 mmt
    • Simply looking year over year, the USDA is expecting a 9.3 mmt boost of soybean production from the two South American behemoths. This equates to a 5% boost.
  • Western Canadian Grain Bids mostly jumped week over week. Canola up $14 per tonne or $0.31 per bushel week over week. 
  • Local Spring Wheat bids up $0.16, Durum Bids Unchanged mostly, Feed Barley bids coming in at $7.75 central sask, up just pennies over last week.
  • Oats remain relatively unchanged. Down slightly.
  • Flax, and pulse crops news has slown down and bid movement is relatively small in recent weeks. Mustard bids jumped up a few pennies per bushel this week, but special crops are relatively untouched for the week.
  • Alberta received a new agriculture minister this week as the prior Devin Dreeshen resigned. Nate Horner, minister of Rural Economic Development, will take his place.

Spring Wheat – $10.63/Bushel, Up $0.48/5 Days Futures Contract Minneapolis

Canadian spring wheat exports according to the Canadian Grain Commission are sitting at 3.29 mmt having left since August 1st, 2021.  This is behind last years swift pace of 5.20 mmt. It is well understood that there will be less exportable wheat this year and as a result has drove domestic prices higher for millers and exporters.  Local wheat bids are sitting near sustained recent record high levels and has helped many producers return higher margins than anticipated heading into the season.

Canada is losing out on some new export business although as the nation is the worlds most expensive wheat for export currently.  It is higher than US wheat and will have a bit more of a challenge pricing itself into the North American marketplace.

International Daily F.O.B. Export Bids – USDA FAS GRAINS REPORT

Special Crops

  • Red lentil prices in India coming off recent highs but still high enough to encourage healthy planting figures for the coming crop.
  • Volumes of flax sitting at CDN export terminals is low, pointing at less than normal export movement in the near future. Canadian pricing is also higher than other global players, especially into China. This will discourage new business for the time being.
  • Australian chickpea crop is expected to be large again this year, as well as Faba Beans, forcing higher competition for Canadian crop.
  • Australian durum exports will also create more competition for the Canadian crop.
  • Canadian fall rye bids staying close to average as supplies of the crop are adequate enough to meet demand.
  • Current export numbers.
    • Durum – 860,200 tonnes vs 1,097,000 tonnes 2020
    • Oats – 417,300 tonnes vs 629,500 tonnes 2020
    • Barley 962,400 tonnes vs 907,000 tonnes 2020
    • Peas – 642,000 tonnes vs 1,136,700 tonnes 2020
    • Lentil – 318,500 tonnes vs 414,300 tonnes 2020

Canola – $1004.40 Tonne, Up $13.70/5 Days January Contract

Canola markets take another jump this week after having a few rough days leading up to the USDA WASDE report.  Canola jumped on strength found in other oilseed markets and the fact that soybean numbers were bullish instead of the anticipated bearish figures.

Canola still very expensive oilseed compared to other substitutions but is holding its own in the marketplace for the time being. 

Canola exports are at a dismal 1.555 mmt, down from the 3.126 mmt exported so far in the prior marketing year.   

Canola crush is strong although so far with 2.38 mmt used compared to the 2.6 mmt last year. If estimates are true on crop size and if using a carryover of zero, which was not the case, 31% of the current years crop has been crushed or exported.  We will get final production figures from Stats Canada at the start of December.

International Daily F.O.B. Export Bids – USDA FAS OILSEEDS REPORT

Canadian Dollar – $0.794 USD, Down $0.005 / 5 Days

Bank of Canada kept its policy interest rate untouched in Octobers interest rate announcement but announced it would stop the quantative easing process.  The Bank is strongly hinting at rising interest rates for the near future, not expected until early 2022

Inflation is the main item central banks are looking to control as it spirals out of control and is expected to top 5% before the year is done before cooling back down into 2022.

Western Canadian Weather – Percent of Normal Soil Moisture

Soil Moisture will continue to play a large factor, as always, into 2022 crop rotations. 

Top illustration is as of October 31st, bottom illustration is July 26th, 2021

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