Oct 29 – Durum, Pulses Caught in Trade Crosshairs

Good Morning!

Grain markets this morning are almost all in the green, but durum, one of the crops without a complex, isn’t doing too hot.

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

– Buckminster Fuller (American Architect)

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Durum, Pulses Caught in Trade Crosshairs

Grain markets this morning are almost all in the green, but durum, one of the crops without a complex, isn’t doing too hot.

While we’ll get into that in a bit, the two big headlines emerging from the weekend was that the Boston Red Sox won baseball’s World Series again and Brazil elected the very right-leaning, ex-military Jair Bolsonaro as their new president. [1] The new president-elect is another individual who many deem to be a populist with a very country-first approach. This seems to be a dynamic that is becoming increasingly consistent across more and more countries.

Back to the grain markets, wheat prices had a very strong day on Friday. Had it not been for that strong day, Chicago and KC prices would’ve been down about 30 cents for the week.[2] Corn prices also rallied on Friday but finished lower for the week, too.

Soybean prices remain depressed, mainly because of exports tracking so much lower. This has prompted the calls for U.S. 2018/19 soybean ending stocks to top 1 billion bushels! [3] Currently, the USDA is calling for carryout of 885 million bushels, as of the October WASDE. We’ll get the next estimate from the USDA on Thursday, November 8.

COOL Isn’t That Cool for Durum, Pulses

The most significant news that hit pulse markets recently was that the Indian government is now coming out against Canadian and Australian imports. Specifically, the Modi government believes a report from a supposed Canadian food activist that pulses from these countries have “high levels” of glyphosate residues on them. [4

This is not good news for the peas, lentils, and chickpea prices, even though India isn’t importing nearly as many Canadian pulses as it used to.

The situation in India is sounding eerily similar to that in Italy, who still isn’t importing nearly as much Canadian durum as it used to. Canadian Ag Minister Lawrence MacAulay was there a few weeks ago to meet with his Italian counterpoints, but nothing came of the discussions. [5]

More Durum To Go Around?

Based on current estimates from the AAFC and USDA, combined Canadian and American carryout should account for 28.5% of global durum carryout, with 2.8 MMT carrying over into the 2019/20 crop year.

2018/19 North American durum ending stocks

Specific to durum exports, StatsCan says that 293,440 MT was said to be exported for August. This is about 33% worse than July’s shipments and 38% below last August’s nearly 475,000 MT of durum exports.

StatsCan August 2018 Canadian durum Exports

The top export destination was Morocco, who beat out the United States by just a few truckloads. Combined, these two countries accounted for 2/3s of all Canadian durum exports in August 2018 (or one-third each).

Overall though, Canadian durum exports are tracking 22.5% below last year’s pace with a little more than 660,000 MT shipped out through licensed facilities as of Week 12 of the 2018/19 crop year. Conversely, U.S. durum exports continue to run more than 22% higher year-over-year, with almost 240,000 MT shipped out in the crop year.

To growth,

Brennan Turner

President | CEO
TF: 1-855-332-7653
@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 = $1.3092 
CAD, $1 CAD = $0.7638 USD)

Dec Corn: 0.8¢ (0.22%) to $3.688 USD or $4.828 CAD
Jan Soybeans: 4.5¢ (0.53%) to $8.495 USD or $11.122 CAD
Dec Soybean Meal (per short ton): $2.30 (0.75%) to $309.70 USD or $405.46 CAD

Dec Soybean Oil (cents per lbs): 0.1¢ (0.35%) at 28.32¢ USD or 37.08¢ CAD  
Dec Oats: -0.5¢ (-0.17%) to $2.915 USD or $3.816 CAD
Dec Wheat (Chicago): -1.8¢ (-0.35%) to $5.082 USD or $6.657 CAD
Dec Wheat (Kansas City): -1.3¢ (-0.26%) to $5.035 USD or $6.592 CAD

Dec Wheat (Minneapolis): 2.8¢ (0.48%) to $5.820 USD or $7.619 CAD
Jan Canola: $1.70 (0.35%) to $11.186/bu / $493.20/MT CAD or $8.544/bu / $376.72/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.

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