Western Canadian Market Report – November 18th

Written by HawkEye

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Good Morning,

Western Canadian Market Highlights

  • Grain markets trade sideways for the front half of the week and leg higher on Wednesday afternoon into the close.
  • Front month January canola futures were the lone grain future trading in the red on Wednesday. January canola was trading down close to $10.00 per tonne, meanwhile, March canola was up $4.00 and new crop November picked up $10.30.
    • The move essentially just narrowed the significant inverse in the front month contract. January canola is still trading $16 per tonne over March. In a “typical” market, producers are generally “paid to store” grain with further out months posting a premium.
    • In the current canola market, each contract month further out is at a $30+ inverse until you hit November futures.
  • Canola markets also showing some weakness on the front months partly due to the massive issues affecting Canadian rail transportation to the West Coast.
    • Due to excessive flooding in lower mainland British Columbia, major highways access and rail access has been severed.
    • The main road connection through mainland B.C. is completely washed out and the rail access into Vancouver’s port washed out in a landslide.
    • Rail access to Prince Rupert, further up the coast is open and operatable.
  • Cargill’s High River beef packing plant workers announced strike action starting in December if a labour agreement can not be reached. The packing operation is critical as it can slaughter 4,500 head per day and provides just shy of 40% of Canadian beef supplies.
    • This is important for the grains market as a backlog in packing capacity will keep more cattle on feed for a longer period of time.
    • Would pose a short term front end need for domestic feed and packing capacity would be lost depending on the length of the strike action.
  • Canadian inflation rate hit 4.7% in October, according to the Statistics Canada Consumer Price Index report released yesterday. This is up from the 4.4% annualized rate seen the month prior. The Bank of Canada has set 1% to 3% as its ideal rate of inflation growth and has clearly stated that interest rates hikes are likely in the first half of 2021.
  • January Canola still trading up $10.60 for the week, despite a massive sell off on Wednesday afternoon, futures below $1,000 heading into close.
  • Minneapolis wheat down $0.09 for the week, picking up ground on Wednesday it lost on Friday, Monday, and Tuesday
  • Central Prairie cash bids for the week. Canola up $14.00 per tonne or $0.31 per bushel. Wheat up $5 per tonne or $0.13 on better basis as futures slumped. Feed Barley bids $8.10 delivered. Oat bids fall slightly to $8.03 from the $8.22 bid last week.
  • Flax unchanged, Lentils unchanged, peas unchanged, mustard up a few pennies.
  • NEW WHEAT MARKET RECOMENDATION IN MARKET RECOMENDATION POST. LINK HERE
    • 2021/22 Crop Rec’s: https://exceedgrainmarketing.com/2021-22-crop-year-market-recommendations/
    • 2022/23 Crop Rec’s: https://exceedgrainmarketing.com/2022-23-crop-year-market-recommendations/

Spring Wheat – $10.30/Bushel, Down $0.09/5 Days Futures Contract Minneapolis

Spring wheat futures dropped $0.09 per bushel for the week but local bids increased in at some delivery points on an increase in basis levels.  $12.25 is achievable at many prairie delivery points with basis improving into Alberta and weakening towards eastern Saskatchewan, before improving into Manitoba again. 

Export business may suffer in the coming months depending on the ability to ship grain out of Prince Rupert and Thunder Bay. Thunder Bay is not a full season port although, closing or slowing services in January until March typically. Prince Rupert is a full season port that only has CN rail access, CP shipments cannot directly head there. Viterra, Richardson and Cargill three stakeholders in the Prince Rupert Grain Terminal.

Current wheat export pace sits at 3.42 MMT vs last years speedy export of 5.68 MMT at the same time.

Be sure to see out “Market Recommendations” page in the links above.  

Central Praires Cash Grain Bids 

Special Crops

    • Green pea production in North America dropped harder than yellow peas, but higher than normal old crop supplies kept supplies in better shape than other pulses.
    • Pulse crop planting in India is off to a good start for their dominant “Rabi” crop that is sown in the winter and harvested in the spring.
    • Global Durum prices leveling off, suggesting panic buying is slowing for the time being.
    • Barley exports the only major grain with current year exports exceeding last years pace. Chickpeas also ahead of last year but the export volume is only a measly 3,000 tonnes so far in 2021/22.
    • Canadian Pea Exports were down to 494,000 tonnes in Sept, down fro. 764,000 tonnes in 2020 and 624,000 five year avg. China took 85% of the crop
    • Current export numbers.
      • Durum – 928,000 tonnes vs 1,267,200 tonnes 2020
      • Oats – 454,000 tonnes vs 655,200 tonnes 2020
      • Barley 969,900 tonnes vs 946,600 tonnes 2020
      • Peas – 676,500 tonnes vs 1,209,000 tonnes 2020
      • Lentil – 320,400 tonnes vs 429,100 tonnes 2020

Canola – $1001.00 Tonne, Up $10.60/5 Days January Contract

arkets 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 1.80 mmt, down from the 3.41 mmt exported so far in the prior marketing year.   

Canola crush is strong although so far with 2.63 mmt used compared to the 2.81 mmt last year. If estimates are true on crop size and if using a carryover of zero, which was not the case, one third of the current years crop has been crushed or exported.  We will get final production figures from Stats Canada at the start of December.

Board crush is an assumed and calculated figure and is used as a proxy only.

Canola Cash Bids

Canadian Dollar – $0.793 USD, Down $0.004 / 5 Days

Statistics Canada announced inflation rates hit 4.7% in the month of October.  The rate remains higher than the desired 1% to 3%.  If Inflation persists, which it is expected to, the Bank of Canada is considering raising policy interest rates in FH 2022.

Economic outfall from the state of emergency in British Columbia remains unknown.  The Port of Vancouver is cut off from the rest of Canada by rail and road. An estimated $2.5 billion of economic activity each week originates from the west coast.

Western Canadian Weather – Total Soil Moisture

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

Top illustration is as of October 31st, 2021 bottom illustration is October 31st, 2020

Grain Marketing Recomendation’s 

Use links below to be directed to our current market recommendations