Grain markets moved through the first full week of March trading off of Brazilian logistics issues, bird flu in the United States (U.S.) Southeast, uncertain American biofuel policy, and sporadic North American weather. Also affecting the markets was a bearish Wolrd Agricultural Supple and Demand Estimates (WASDE) report from the United States Department of Agriculture (USDA) on Thursday, March 9th. Ahead of the report, all eyes were on South American production numbers and the bears were rewarded with record soybean and corn production from Brazil, coming in at 108 million and 91.5 million tonnes, respectively. Accordingly, new crop soybean prices on the Chicago Board of Trade nearly dipped back into single digits, while corn tried to hold its ground, still hovering slightly below the psychologically-significant $4 USD/bushel. Time is winding down on what farmers will plant in 2017/18 and the price ratio of new crop soybeans to corn is still sitting above 2.5, but the recent improvement in corn prices has some thinking that there could be a few more acres flip back to the coarse grain.
French winter crops are looking pretty good, with 93 per cent of France’s wheat crop rated good-to-excellent (G/E), 90 per cent of barley considered in G/E health, and 82 per cent of the durum crop in G/E condition. In Russia, winter grain conditions are “better than normal” per the Hydromecentre of Russia, suggesting that portion of the crop that gets categorized as winterkill will be lower this year. According to UkrAgroConsult, 81 per cent of the Ukrainian winter crops are in good or satisfactory condition as the crops start to come out of dormancy. On the export front, Ukraine has now shipped out over 30 million tonnes of grain in the 2016/17 year, whereas Russia has now exported 24.6 million tonnes of grain (down 3.5 per cent compared to this time a year ago), including 19 million tonnes of wheat. On the flipside, India is set to import the most of amount of wheat in over a decade, shipping in 5.5 million tonnes, despite another decent year of production with somewhere around 90 million tonnes harvested.
Switching in pulses, the Canadian government is winding up its trip to India to try and solve the fumigation exemption (or lack thereof) issue, but nothing has been heard yet. Accordingly, some companies are coming back with new crop bids of 30¢ CAD/lb for No. 2 large and small green lentils, 26¢/lb for medium green lentils, and 22¢/lb for No. 2 or better small red lentils. The lower bids also are a result of the larger carryout of supplies expected, something that is also expected in Canadian wheat prices given the slowdown in exports. Conversely, as per pdqinfo.ca, western Canadian cash wheat prices continue to sink back closer to that $6 CAD/bushel handle as carryout numbers continue to climb in the Great White North. Cash canola prices in Canadian Prairies continue to sit above $11/bushel for front month contracts, but are down a bit week-over-week after being pressured by lower oil and other oilseed prices, however a lower Canadian dollar has helped support it.
With more and more eyes on 2017/18, Australian Bureau of Agricultural and Resource Economics (ABARES) is expecting Aussie wheat production to pull back substantially from this past year’s bumper crop of 35.1 million tonnes to just 24 million in 2017/18, mainly because of yields returning to more trendline values and acres falling 1.1 per cent year-over-year (YoY) to 31.9 million acres. On the export front, ABARES thinks that 2017/18 wheat exports from Australian will come in at 20.9 million tonnes, a drop of 8.4 per cent from this year’s 23 million tonnes. Wheat is not the only crop seeing its acres getting flipped. Australian barley production is seen dropping 37 per cent YoY back into single digits at 8.5 million tonnes on more average yields, but thanks to better returns and higher prices, canola acres in 2017/18 are expected to climb, keeping production elevated.
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