Sept 27 – Canola Prices Creep on StatsCan, Stalled Harvest

Good Morning!

Grain markets are slightly in the red this morning with canola prices being the only commodity hanging onto a positive change day-over-day right now.

“We’ve observed that people who stall in their personal growth work often have counterproductive soft addictions that stand in their way of growth and having the life they say they want.”

– Dr. Judith Wright (U.S. psychologist)

 

Test your grain today!

 

Canola Prices Creep on StatsCan, Stalled Harvest

Grain markets are slightly in the red this morning with canola prices being the only commodity hanging onto a positive change day-over-day right now.

Canola prices are remaining strong based on yesterday’s slightly bullish crush report from StatsCan and the lack of harvest progress in Western Canada.

Yesterday, in broader markets, the U.S. Federal Reserve raised interest rates and said that there are more coming as the U.S. economy is doing well. [1] With a strong U.S. Dollar, this will put some pressure on the Canadian Dollar. The most pressure for the Loonie will come from a federal election, which is anticipated in the coming months. Historically speaking, given the uncertainty of a potential change in leadership, this puts pressure on a country’s currency.

Tomorrow, we’ll get the USDA’s Quarterly Stocks and Small Grains report, and it’s unlikely that the report will help propel grain prices higher much.

Going into the report, the market is expecting to see final 2017/18 U.S. soybean stocks coming in around 390 million bushels (MBU), which would be 5 MBU below the USDA’s estimate in their September WASDE. Should the USDA acknowledge the stronger crush pace, the number could dip down into “the 365 – 370 range”, as per Chip Flory of the Farm Journal. [2]

For corn, September 1 inventories across the U.S. are estimated at 2.012 billion bushels or a little more than 51.1 million metric tonnes if converting bushels into metric tonnes at GrainUnitConverter.com.

Finally, for wheat, expectations are to see 2.332 billion bushels (or 63.5 MMT).

Canola Prices Reflect Strong Demand

Yesterday, StatsCan gave us a crush report that indicated ongoing margin pressures and proximity to the oversupplied U.S. soy oil market are having an impact on canola crush volumes in Canada.

The report showed that the amount of canola crush in August hit roughly 743,000 MT. That figure represented an 11.3% decline from July. Conversely, the monthly canola crush was about 18% higher than the August 2017 numbers. Very concretely, Canadian canola crushers used 114,700 MT more canola in August 2018 than during the same period last year.

As it relates to the 5-year average for August of a little more than 559,000 MT, August 2018’s canola crush was nearly 33% higher.

Read the full GrainCents analysis of StatsCan’s report for Canadian canola crush here and Canadian soybean crush here.

Canola prices are starting to reflect strong demand

Canadian Harvest Progress Remains Stalled           

This afternoon we’ll Saskatchewan Agriculture’s crop progress update and tomorrow we’ll get the same from Alberta Agriculture, but neither report is expected to show much advancement on Harvest 2018. The impact on slowed progress will likely be most felt on spring wheat and canola prices.

In Saskatchewan, half of the spring wheat crop and 56% of canola field still had not been combined as of last week’s report. Going into this week, we expect those numbers not to change too much. For perspective, at this time a year ago, the Saskatchewan canola harvest was 68% complete, and spring wheat combing only had about a quarter of the fields left to go.

In last week’s report, just 14% of Alberta’s canola crop was harvested, up 1 point week-over-week, while the spring wheat harvest progress gained 2 points from the week before to reach 31%. We would expect similar levels of progress this week. At this time a year ago, 63% of Alberta’s spring wheat and 41% of their canola crop was harvested.

As per StatsCan’s production estimates from last week, between these two provinces, as of last week, 47% of Canada’s spring wheat crop was still not combined and instead held under a blanket of moisture (be it snow or rain). This equates to about 10.86 million metric tonnes (MMT).

Comparatively, those watching canola prices should understand that potentially 56% – or 11.8 MMT – of the Canadian canola fields were unharvested as of last week.

Food for thought: Australia is dealing with the opposite issue. Thanks to the drought conditions, farmers in the eastern and central regions are baling their canola crops and just selling the hay because there’s more demand for that than low-oil content canola. 

As reported by RealAgriculture.com, most agronomists agree that this year’s harvest in Western Canada is coming down to two things: “a lack of moisture to drive enzyme activity (i.e., green seeds); and, a quick switch to cold/freezing temps that left stems unable to move anything within the plant — and that includes glyphosate.” [3]

Are there are some drying down temperatures in the forecast any time soon? The frustratingly short answer is no, not really. Drew Lerner of World Weather says it’s relatively unlikely unless the expected fall El Nino starts strengthening to provide “more sunny days and warm weather biases.” [4]

Like we did for spring wheat and canola production estimates above, we’ll be looking at how much of the Western Canadian crop is left to be unharvested for our GrainCents readers of all the other crops.

As a reminder, with this sort of weather, and so much crop left out, we strongly recommend that you proactively order your grain tests so that as soon as the samples are coming in, you can send them away and get the grain tested. Be disease or other quality issues in cereals, or earth tag in pulses, knowing what quality of grain you have is the second-most important step in my grain market plan (the first is knowing your cost of production).

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

 

At 7:20 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3070 
CAD, $1 CAD = $0.7651 USD)

Dec Corn: -1.3¢ (-0.36%) to $3.618 USD or $4.729 CAD
Nov Soybeans: -0.3¢ (-0.04%) to $8.498 USD or $11.107 CAD
Dec Soybean Meal (per short ton): $0.40 (0.13%) to $311.30 USD or $406.88 CAD

Dec Soybean Oil (cents per lbs): -0.90¢ (-0.31%) at 28.70¢ USD or 35.51¢ CAD  
Dec Oats: -1.0¢ (-0.39%) to $2.575 USD or $3.366 CAD
Dec Wheat (Chicago): unchanged to $5.175 USD or $6.764 CAD
Dec Wheat (Kansas City): -3.0¢ (-0.58%) to $5.180 USD or $6.770 CAD

Dec Wheat (Minneapolis): unchanged to $5.775 USD or $7.548 CAD
Nov Canola: $0.80 (0.16%) to $11.238/bu / $495.50/MT CAD or $8.598/bu / $379.10/MT USD

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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