Major grains & oilseeds markets – Futures markets traded in a narrow range for most of the week closing lower on Friday with quite light volume.
There was a good volume of cash wheat trade last week at slightly higher prices with EU wheat competing with Russian for Egyptian business. Russian prices were slightly higher suggesting less volume was being offered than in previous weeks. Feed wheat traded to Korea at only a minor discount to low grade milling wheat. U.S. exports for the week were quite good, particularly wheat.
Funds came into the market as big buyers, reversing their positions of a week ago.
StatsCan used a different system of estimating the Canadian crop and increased/ decreased some production numbers compared to their last estimate.
The USDA’S October numbers will be watched very closely particularly corn; at low prices compared to recent values it is getting close to minimum USA carryout numbers. The soybean carryover is shrinking, particularly if you believe that Chinese demand is bigger and if you use the Informa acres.
Soybeans - Soybeans were quite strong for most of the week but fell down at the end. We had some good buying during the week by the Chinese and reasonable weekly exports.
Canola - StatsCan surprised the market with a new canola estimate of 14.4 myn tonnes for the 2015/16 crop compared to their previous late Aug. estimate of 13.3 myn tonnes. They do not say which one is their correct estimate, as they were each calculated using different form of measurement. The StatsCan numbers are confusing and clearly, StatsCan have no idea of the consequences in publishing such differing numbers about 30 days apart. Their new numbers are very close to Mercantile’s estimate of the crop, so we do not find them bearish.
Flaxseed - North Dakota flax harvest was 74% complete as of Sept. 14th. This is well ahead of 27% last year and 47% average for this date. Flaxseed prices had been supported by USA demand and the weak Canadian dollar, but now crusher and elevator bids from the U.S. have declined due to harvest pressure south of the border.
Wheat – The new ‘model-based’ StatsCan estimate for all wheat combined showed was an increase of 714k mt over the previous estimate. Spring wheat production was increased by 429k mt. In the market, last week’s sale of 100,000 tonnes of Canadian wheat to Iran at $247/mt C&F was instructive; it was done at a good price and $15 over the cheapest Russian offer. It shows that quality (~#3 CWRS, 12 Pro) still carries value in the market.
Durum - USDA reported last week’s durum export inspections pace at 490,006 bushels with Tunisia the only destination. Last week’s durum export sales were reported at 100,000 bushels. This brings the year to date export sales pace for U.S. durum to 18.9 mln bu compared to 8.6 mln bu last year at this time. Canada so far has only shipped 188k mt of durum into overseas markets (excl. to the U.S.). This is very low and compares to 736k mt last YTD.
Feed Grains/ Barley – China remains the key to his market: If the USDA is correct on the Black Sea crop and the Chinese permit issue does bring a halt to imports, then the world has plenty of barley. But on the other hand, if the trade is right on the Black Sea and Chinese imports pick up again after a period of adjustment, the world does not have plenty of barley.
Oats - Chicago Dec oat futures closed slightly higher for the week supported by gains in corn and wheat.
Peas – The handling statistics this week is interesting again. Producer deliveries slowed from 124k mt last week to 68k mt in week 6 as harvest is mostly complete and prices have not been inspiring further out-of-the-bin deliveries. It should take a little more in price to inspire farmers to open the bins
Lentils – Bulk handling numbers for lentils are exceptionally strong: 255k mt of lentils have been delivered into the bulk handling system; this is 177k mt ahead of last years’ bulk deliveries. It is a testimony to the strength of pulse sales into the drought-affected markets in the Indian Subcontinent.
StatsCan published crop production estimates based on a new ‘model-based methodology. For lentils (and canola) the difference in numbers between the Aug. 21 and the Sept. 17 reports was especially large. In the latest report lentil production was reduced by a full 9.1% or by 190k mt. This is potentially a big change to the balance sheet and goes counter to the latest SAF numbers, which would indicate an even larger crop than the Aug. 21 StatsCan report. – We are staying with our previous balance sheet for now, until we get the next updates on yields.
Canaryseed - Getting a good reading on average yields will be key to this market. If yields are indeed above 1,100 lbs/acre, then this is not bullish input.
[If you are interested in more background intelligence and our new crop supply & demand numbers, pls contact Mercantile]
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