March 31st was the release of both the seeding intentions and the projected carryout stocks. The market moved dramatically higher as the seeding intentions forecast by the USDA fell significantly short of the market anticipations. Soybeans being the greatest market driver over the past 3 months, acreage was estimated to increase from 83.1m last year to 87.6 however the market was expecting a number closer to 90 million acres. Corn estimates were almost unchanged at 91.14m up from 90.8 last year where the market was looking for 93 million acres. Spring wheat was estimated at 11.74m from 12.25 last year, with most of the wheat production coming from 46.358m (44.349 in ’20) Winter wheat well out of dormancy at this point. Other crops worth mentioning are Durum at 1.540m (1.684 in ’20), Canola at 2.115 (1.825 last), Flax at 400k (305 last), Lentils at 611k (528 last), Peas at 893k (999 last) and chickpeas being somewhat unchanged at 290k (270 last and 860 in ’18). No major changes in the stocks worth mentioning, rather the excitement was from a smaller than anticipated projected planting.
We would speculate the estimates by the USDA are quite conservative and that the actual number will be more in line with the trade estimates. There is certainly a time delay in obtaining and releasing these numbers, and they are just that, estimates. The next big report will be in June, and one would expect bigger increases in corn and beans versus the March report.
The USDA report shows wheat acres decreasing from 12.5 mil last year to 11.74 mil this year. As well, durum acres are also down from 1.68 mil acres to 1.54 mil acres. As such we’ve seen a little bump up in new crop milling durum prices with $8.50/bu picked up on the farm for Oct.-Dec. movement in SE Sask. There also seems to be a little uptick in old crop feed wheat with some prices popping back up to $7.75/bu FOB in the right location for pushed out movement. Maybe someone should relay those prices to the milling market, as a #1 13.5% pro HRSW sits patiently waiting to join the party. Bids delivered to plant in Central Saskatchewan hover around that $7.50 – $7.65/bu for late Spring/Summer movement, which as we can see is cheaper than feed bids in some cases. New crop wheat pricing is lurking in the bushes with less than a few indications available, so if you have a firm offer on milling or feed let your merchant know.
Soybean futures rocketed to limit up (70 c/bu USD) today based on the USDA Prospective Planting Report. Soybean acres were forecasted at 87.6 million, much lower than anticipated. Local soybean bids now hover around $16.00/bu picked up depending on location. The faba bean market has received a shot in the arm from domestic milling and processing demand. Faba bids are in the range of $9.00/bu FOB farm, location dependent. Dry bean market prices remain well supported coupled with robust export numbers.
After a tough start to the week, canola has rebounded in a big way today due the bullish news coming from the USDA report. Canola takes direction a limit up soybean market today, and at time of writing May canola futures are also limit up on the day and sitting at $757/MT. Although an impressive gain, values are still down from the same time last week when they were at $792/MT. July futures are also near to testing the upper limit and are currently showing $715/MT at time of writing. Last week we were seeing the July futures at $738/MT. Looking at new crop, we’re actually seeing an increase from last week in the November futures after today’s big day bringing it up to $616/MT. It will be interesting to see if canola can trend back up to recent highs as the week finishes up on this bullish report.
As has been suspected over the last couple weeks, the price of barley is slowly starting to tail off on old crop. Feed bids at $6.00/bu FOB farm are still out there, but currently growing harder to find. This week, emphasis remains on selling what is left in the bins. Reports still suggest an increase in barley acres and whether it be malt or feed, current feed vs malt bids suggest majority will be pushed into the feed market. We all know how the malt barley game is played, so even if most of the acres being seeded are malt varieties, you can expect that there will be a good chunk that will not be malt quality. Buyers are seeing this as well, so it’s likely a safe bet to think that the price of feed is not going higher anytime soon. New crop bids at $5.00/bu FOB are still kicking around which makes for a great starting point. The malt side of things remains quiet, so putting a value on it is difficult. For the most part, many buyers either don’t have an active bid or are right around the same value as feed. Current COVID shutdowns have decreased overall use and demand for malt is not necessarily the same as it has been in previous years. Sporting venues, concerts and restaurants not being at full capacity plays a big roll into this demand and remaining competitive with current feed pricing is tough for malt buyers. At the end of the day, if you are growing a malt variety, there aren’t any rules saying you can’t lock up 10-25% of your production as feed now and look to malt markets for the overage come harvest time. By now it is no secret that the high-priced feed market is being pushed by China’s urgency to buy, so beware that this market could very well drop off overnight if they decide they no longer want or need barley. All in all, would you rather wait another 2 months to potentially gain $0.20/bu or take a $1.50/bu (or more) hit?
Canaryseed is still very strong this week. New crop prices have pushed back a touch in some instances, but we are still trading high value contracts with an act of God. Right now, bids are sitting around $0.295/lb FOB farm, with opportunities for an additional half penny if the freight warrants it. Like we have said in previous weeks, this looks to be a very good place to get 10bu/acre locked up on some or all of your acres. If acres go up like they are projected to, we could very well see some price softness come harvest. All in all, signing a contract at above average pricing is a good play to take some risk of the table. Old crop prices are still holding strong with options for quick delivery at discounted values or, deferred delivery at top end values. Highest spot bids are currently sitting at $0.325/lb FOB farm for Summer shipment in good freight areas. Seed sales are getting close to wrapping up, so if you are still looking for product let us know, as we have a good supply of certified left.
The pea market has taken a decline in pricing and whether that is due to seasonal tendencies, exports slowing, or more likely a combination of the two, yellow peas have pulled off their highs. Most of our buyers have moved yellow pea bids to $10 – 10.50/bu picked up. New crop values have also softened to $8.50 – 9.00/bu picked up with the latter getting harder to find and movements being pushed out into early 2022. Green peas remain lackluster with old crop bids posted at $9 – 9.50/bu picked up ($10 delivered in a few areas). New crop values remain at $9.00/bu picked up on greens in most cases. Maple peas have not fluctuated much with bids at $10 – 10.50/bu picked up on old crop (variety specific), while new crop values are bid at $9 – 9.50/bu picked up. As per reports, there is still optimism of strong Chinese demand for the 2021/2022 marketing year, however, there are threats to consider. These include, China’s uncertain feed pea demand and Ukraine potentially supplying more of China’s 2021/2022 demands, previously heavily dominated by Canada.
The oats market continues its sideways run of strong prices. Spot bids are still catching high $3’s to $4/bu on a #2 milling oat in many areas of the province for Summer movement and new crop bids remain at similar levels once you push into Jan.-March of 2022. These values should be a big push for oats to get seeded this year, but the strength in the market across many different crops keeps a cap on things going too wild. No act of God on oats contracts does pose some risk, but the high price does pose some risk protection in the assumption markets should not be able to push too much higher. As most of you know, many buyers are zero tolerance on glyphosate sprayed on oats so keep that in mind as you do your crop and harvest planning this year. Spraying glyphosate preharvest will close up a large portion of the market to you.
Not much change in flax prices this week other than the fact that the pool of buyers willing to pay $23.00/bu FOB for Summer months is dwindling. If you still have flax in the bins there is a $7/bu spread between old and new crop, so holding onto old crop at this point is risky. New crop contracts are still available with the market now closer to $16.00/bu picked up and earlier movements at that price are mostly booked up. If the new crop acre projections are correct, then we could see that market drop further. Analysts have mentioned that they are forecasting an increase in seeded acres in the Black Sea region up 25% from last year. That could boost production upwards of 47%. Seems that prices are only holding sideways is because of concerns about dry conditions locally, but keep in mind that may not offset the bigger crops overseas.
Lentil markets remain quiet this week with minimal trades taking place compared to years past at the same time. Green lentils are still under pressure as a larger amount remains in the bins than originally thought as we head into the last four months before new crop arrives. At this stage we aren’t seeing any reason for a price rally in the near future, but if crop conditions look poor in mid to late June, we may see a late season spike. When it comes to marketing your green lentils there are few things to consider. At this point most green lentil producers are concerned with moisture and most still have product in the bin. We currently see a 5-cent gap between old and new crop, so what are the marketing options? We believe signing new crop offers two good options. First option: hold your old crop and if you’re fearful of lack of moisture then sign-up new crop with an AOG. If there is a crop failure due to drought (or anything else) the AOG comes into play, presumably bids rise, and you sell product in the bin for increased revenue. Second option: sign up new crop and if crop conditions look good, sell the product in the bin before the expected market collapse. In either case, with no immediate market rally in sight, growers need to consider locking in some profitability. When it comes to marketing you won’t always get it 100% right, however, locking in profitability and limiting downside risk is always good a plan.
Chickpeas remain stable this week with trades taking place between $0.32-$0.33/lb FOB farm depending on sizing for May-July movement. New crop bids are similar to old crop values, but the number of buyers willing to purchase is fewer. Most buyers are concerned with the amount of 7mm sized product in the sample and wanting product to contain under 10%. There are a few buyers that would look at purchasing chickpeas that have over 10% 7mm size, but contracts are likely to carry some discount. Either way, there are options available to move your product and we urge growers to reach out with sizing breakdowns at the ready. Chickpea trades remain quiet with producers reluctant to sell waiting for a rally. Of course, this market has not taken off like most were expecting and buyers sit idly, but comfortably by, content with trickling in product. Saskatchewan Pulse Growers “In the Market” report suggested that India’s chickpeas will be smaller than expected but they will still produce a sizable crop. This may be enough to hold prices at bay for a while.
The talk around mustard recently is how many acres are being planted this year. Will planted acres be enough paired with average yields to at least keep stocks stable? Will the stocks be impacted by even the slightest production problem this year? This all remains to be seen, but generally things are being viewed as potentially tight. Prices, for now, remain stable at $0.38-$0.39/lb on #1 brown mustard, $0.41-$0.42/lb on #1 yellow and $0.32-$0.34/lb on #1 oriental depending on variety. Oriental still carries the premium on Forge type over Cutlass although the gap to appears to have narrowed slightly over the past 2-3 months. Movement can be as short as April and as long as June on some contracts, so talk to your merchant for options that meet your needs. Strong new crop prices are trading at 10 bu/ac with an act of God, and we have bids relatively similar to spot prices available for a September through July program. Last minute seed is available for mustard, and possibly delivered to your yard if you live in Saskatchewan. Give us a call to see if we can still deliver to you.
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.