Market Insider

Keeping Our Eyes on the Price

Grain prices on the cash markets across Western Canada continue to try and climb off the harvest lows. All except pulse crops. Thanks to India’s 50% peas import tax, cash prices for #2 yellow peas in Western Canada are sitting below $6 CAD / bushel. Fun fact: this week the FarmLead Marketplace saw over 3,000 tonnes of the same quality yellow peas get sold into the feed market for $7 / bushel. On the flipside (and some good news) canola prices on the spot market are above $11 CAD / prices almost everywhere in the Prairies. This is a price we haven’t seen for a few months, which is indication that if you haven’t taken advantage by making a sale of 10%, now might be the time. Wheat prices have also impressed, with $7 / bushel available for nearby movement almost everywhere.

Overall, cash wheat prices in both Canada and the US have improved as markets pull off the harvest lows. In the Great White North, basis has improved compared to where it was a month ago, mainly thanks to a weaker Loonie. In the US, the stronger basis is making the front month futures contract and those at later dates start to converge. Translation: farmers who have not be able to capture the carry for premiums for deferred delivery are losing their window of opportunity.

This includes new crop (or 2018/19 crop), which has seen some decent prices. Informa came out this week with its estimate for 2018/19 American winter wheat acreage, just as the seeding campaign is practically complete. Informa is estimating 31.92 million acres of winter wheat was seeded this fall. Their total US wheat acreage estimate is 45.63 million acres, which suggests higher spring wheat acres compared to what 2017 was. Information is also expecting U.S. farmers to plant 91.42 million acres of corn and 89.63 million acres of soybeans next spring. Their previous estimate was 90.46 million acres of corn and 90.35 million acres of beans.

In Europe, Strategie Grains lowered its estimate for the EU soft wheat production by 300,000 to 142.5 million tonnes. However, this is still a 5% jump from last year’s production number. With the higher production and similar demand comes lower prices. As such, in the United Kingdom, wheat sales are about 25% behind where they were a year ago. In fact, European soft wheat exports of just 7.63 million tonnes thus far this marketing is season is also 25% lower year-over-year.

Digging deeper, there’s some pretty strong export competition in Europe right now and the Black Sea is winning (like we didn’t know that eh!) FranceAgriMer is estimating that 9.9 million tonnes of French soft wheat will get exported to non-US wheat countries. This means ending stocks in the country will sit closer to 3.3 million tonnes.

Overall, the market continues to watch South American weather for direction. A La Nina event this year may be short-lived but it will happen during South America’s main growing season. I wouldn’t exactly recommend keeping your eyes glued to what’s happening south of the equator, but it is likely to play a significant role in upside opportunity.

To growth!

Brennan Turner
President & CEO |