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Rayglen Market Comments – July 25, 2019

Dry peas are on course for a year over year increase in production levels in both Canada and United States. Canada is indicating a 20% increase in planted acres and will set a record at 4.3 million acres. The US also has increased their planted acres to over 1 million acres. With increased planted acres comes the logical prospect of increased production. So is the case with Canada which is projecting a matching 20% production increased to 4.3 million metric tonne along with a US increase of 14% to 0.8 million metric tonne. With production up, the question then becomes what are we going to do with all of the peas given shaky export demand? Well, old crop carryout is actually forecasted to be quite low at 5% so this helps erode a potential mountain of available supply and is projected at 4.5 million metric tonne. Take home story is that the 2019/2020 pea market will be well supplied but not grossly oversupplied. AAFC projects a comfortable carryout of 500,000 MT or 12% stocks to use ratio. As per usual, a large percentage of peas will likely be directed to market at harvest which will likely exert downward price pressure. If you intend to deliver peas at harvest, perhaps consider getting out in front of the pack and taking advantage of pricing. Local new crop bids are in the range of $6.00/bu picked up on farm for yellow peas, green peas are in the range of $7.50/bu picked up. Please contact us for prices on other classes such as Maples and Duns.

Canola pricing remains sluggish again this week. Looking at the November Futures trading range since the beginning of July; the 8th was the lowest price of $443.90/MT and July 2nd was the highest price at $454.40/MT according to Bar Charts. The July average so far is $447.58 based on the opening market price. This translates back to an 9.50 farmgate based on $30 basis.  The day-to-day pricing has not seen many big swings as daily variances are rarely outside of 1-2 bucks, plus or minus.  These markets likely remain fairly stable as there is not much that is going to change the market perception until farmers hit the field and we can get a better read on yield and quality. Not much spur to sell into these markets but if you need bins cleaned a firm target might catch a slight premium in this climate. 

Chickpea pricing has been very flat for the last few weeks with buyers showing no indications of changing prices in either direction. We are starting to hear more stories of disease severely affecting chickpea crops in southern Saskatchewan. At this point it is unknown how large the affected area is, but it is something to keep an eye on as we get closer to harvest in the next few weeks. Today, both old and new crop contracts are available in the 23-24 cents/lb FOB farm range depending on your location and sizing with new crop pricing still including a full Act of God. As always, if you have a target price in mind be sure to give us a call or check out our offer system on the Rayglen website.

We are seeing a small drop in feed barley prices this week compared to last. As new crop inches closer and closer buyers are patiently waiting to see what kind of crop 2019 will really bring. Most buyers are full right now for July movement, but August is still available if you were hoping to get some product moved before harvest (depending on your area). With corn prices being so high because of the drastic decrease in acres due to flooding, we thought we would see support in the market but for the time being, prices are really waiting on what the harvest brings seeing that barley acres are up from last year. New crop prices are still being shown for around that $4.25/bu fob farm, with act of God in certain areas. Old crop barley prices are between $4.50-4.80/bu for August movement depending on freight.

On the lentil front, Indian monsoons are below average but by no means considered a disaster. Red lentils on international trade scale has been referred to as “impossible to sell” and “not a buyer at any level”. It is expected that India will maintain its posturing on import tariffs and red lentils will hover between $0.16-$0.19/lb range for the remainder of 2019.  Green Lentil markets remain relatively strong and steady.  The bins are open just enough to maintain values as well as support new crop interest on the buyer’s side of the trade. There is more of a bullish feel for green lentils but should be viewed as opportunity as opposed to a run-away market. Richleas are trading mostly out of the USA at USD $0.14-0.145/lb FOB and Large greens old and new crop around CAD$0.22/lb FOB for a #2 with freight sensitivity. Once quality and yield is determined for the coming harvest the green lentil market is expected to shift… which way, remains to be seen. Feed markets are unchanged at $0.10-0.12/lb FOB farm.

The story remains the same on US soybeans. Acres lost to flooding continue to dictate markets and now yields are the next question. The latest USDA report pegs soybeans at 40% blooming, 7% setting pods, and 54% good to excellent with 67.2% being the 5-year average. Futures remain in the $8.90 USD range after having popped at the end of last week. Local soybean bids are trading in the range of $9.75-$10.00/bu picked up on farm. Soybeans have been showing some life as there are hopes of renewed talks between the US and China. New crop #2 faba bean bids continue to hover near $7.50-$8.00/bu delivered. Call your merchant for details on old and new crop faba beans.  

Canary seed continues to be a bright spot overall in the market. At the tail end of last week and beginning of this we saw a price surge on old crop at $0.25/lb FOB for quick movement. And just like the wind, it came and went in a hurry. Since then, pricing has tapered back to $0.24/lb FOB for July/August movement. Though we do have old crop and new crop overlap with some buyer interest at $0.25/lb FOB with September to November movement timeframe.  That being said, we may see these new crop prices pull up over the next bit. As of July 15th, only 40% of canary crops rated good to excellent. That’s a step down from the 10-year average of 61%. Accompanied with the weaker crop outlook comes the decrease in overall canary bushels which may push the market prices higher. This may finally pull out all those mysteriously unreported canary seed piles on the farm.

The mustard crop, primarily in Saskatchewan, has definitely been improving with timely rains in the last little while. As of July 15th, the mustard crop has been rated 35% good to excellent.  The 2 weeks prior to this report were rated at 24% good to excellent, so it’s good to hear that crop conditions are improving.  The improving conditions still drastically lag the 10-year average of 69% good to excellent so we are not expecting a huge crop at this juncture. There has been not a lot of movement on the mustard price over the last little while and bids have been relatively stable on all three flavors. Yellow has been trading between 35-36 c/lb as a FOB farm price whereas brown has been sitting between 29-30 c/lb based on a #1 quality. Spot price on oriental has been trading between 23-23.5 c/lb in very minimal trade which has kept the price stable. The new crop prices for full crop year on oriental carry a 2-3 cent premium to today’s prices which instill some confidence that this market may break free of its current slump.

For those with flax still in the bin, you still may be able to capture $13.50 – $14.15/bu picked up, depending on quality.  If you want to wait until new crop, that market is still holding at $12.50/bu FOB. Old crop prices are holding due to lack of inventories, as reports, this is the lowest since 2014/2015 in country elevators but based on the new crop picture it’s time to sell the remainder in the bin. We will have to wait until harvest to see if fall bids become more aggressive to fill the pipelines. So far, there is no urgency to build supplies, even though there is uncertainty about yields. The larger US acres will limit demand, but the offset could be a smaller Russian crop, which opens opportunity into the EU and China.

Oat crop conditions are holding well and as of last week were rating 75% at good to excellent in the recent Alberta crop report. The supply of good quality oats is down, which has milling prices holding quite strong. If you still have milling oats in the bin, buyers’ demand is there if you are needing movement before harvest. Prices on milling quality is at $3.75/bu delivered and new crop, depending on movement from off the combine to next year, is at $3.15 – $3.50/bu delivered. Also, conditional on how poor the quality and weight are, there are options to move low-quality oats as well with pricing ranging from $2.25-2.75/bu.

The wheat crop looks a fair bit better in recent weeks to what we were looking at just a few short weeks ago. We are not seeing much buyer interest in milling wheat today with indications barely scratching $6/bu delivered mill into the early winter months. Feed prices remain in the high $5’s to $6/bu range depending on location around the province as prices strengthen closer to feedlot alley. Fall pricing on feed wheat at $5/bu or better is not a bad opportunity to look at today, with the way the crops around the province have come on and areas that have received a lot of rain starting to worry about disease pressure. Milling durum bids are around $6.50-$7.00/bu range delivered in as of late. The US wheat and durum crop tour has shown the first reports that the US crop looks to be average yielding at this time, though they still have some more ground to cover to complete the report, so we will see how this unfolds.

Rayglen Market Comments are for informational purposes only. Rayglen Commodities and its agents or employees shall not be liable for any loss or damage suffered by any person as a result of reliance on any of the contents contained within these products, whether such loss or damage arises from negligence or misrepresentation or any act or omission of its agents or employees