The agricultural industry this week was impacted by some geopolitical tension. North Korea and U.S. President Trump continue to trade warring words, while in Canada, a battle has started between small businesses and farmers and the Liberal federal government over proposed tax reform. For grain markets, losses were made up for from last week’s bullish technicals, and re-ignited buying interest helped push most prices confidently into the green.

Oats were the big winner, up 5.2% for the week, followed by Minneapolis hard red spring wheat, which gained 2.1%. Soybeans, gained 1.7% with a big run towards the end of the week on much-better-than-expected exports sales. Kansas City hard red winter wheat was up 1%, Chicago wheat eked out a 0.15% gain from last Friday. Canola improved by 1.05% to get back above C$490/metric tonne on the November contract on the Winnipeg ICE futures board. Corn was the only big loser, down 0.35% for the week, mainly because of export sales came in below expectations.

American corn export sales were announced at roughly 527,000 MT or 20.7 million bushels. For corn, exports sales are tracking 16% behind the average for this time of year. However, US corn total-marketing-year exports are expected to fall 7% compared the average of the past few years.

U.S. soybean export sales for last week were 2.34 million tonnes, well above the market’s pre-report estimate of 1.2 million to 1.5 million tonnes. The big sales bring up the total contracted-for-export volume to 19.3 million tonnes (or 710 million bushels if you’re using The full-year target by the USDA is for 61.2 million tonnes (or 2.25 billion bushels). Compared to years past, current US soybean export sales are tracking 12% behind the 5-year average and 18% behind last year’s sales pace.

U.S. wheat export sales were at the low-end of expectations, with a little more than 307,000 MT or 11.3 million bushels. In another FarmLead insights piece published this week, we examine the rise of Russia’s wheat production and exports. Also, we explore how Russia has affected other major exporters and what it means for wheat farmers in other countries (including Canada & the U.S.).

Agritel thinks that the Russian wheat harvest could get bigger yet though. Yields in the Central, Volga, and Ural regions are tracking 27%, 27% and, 12% higher than 2016’s! 82% of the wheat harvest is in the books with average yields above 51 bushels per acre! Last year, those average yields were just over 43 bushels per acre. With these sorts of yields, total harvested volumes are already above 78 million tonnes. As such, Agritel thinks that the USDA’s target of an 81-million-tonne wheat crop in Russia may be underestimated.

This week, Statistics Canada surprised the market with their own upgrade to the wheat crop in the Great White North. This week’s grain production estimates from StatsCan Is based on satellite and climate data. It was generally viewed as bearish, as the only crops that got smaller were canary seed, flax, and mustard.

Total wheat production is estimated at 27.1 million. This number is slightly above the USDA’s estimate last week of Canadian wheat output this year of 26.5 million tonnes. It’s also a far cry from StatsCan’s August estimate of 25.5 million tonnes. More notably, spring wheat is estimated at 20.1 million tonnes, much better than the 18.9 million tonnes forecasted back on August 31st. National average spring wheat yields in Canada are expected to come in at 47.2 bushels per acre. This is down more than 9% from 2016’s 52 bushel-per-acre- average haul.

For durum, the satellites suggest a 4.3-million-tonne crop. This is a healthy improvement from the 3.9 million tonnes forecasted 3 weeks ago. However, the 5-year average is still nearly 5.9 million tonnes. Average yields are pegged at 31 bushels per acre, a drop of more than 1/3 from last year’s crop. Adding to a smaller crop is acreage is down 13% from 2016.

For canola, StatsCan’s satellites show a potential record crop of 19.7 million tonnes. This figure is a far cry from their previous StatsCan phone call-survey based estimate of 18.2 million tonnes! Soybeans yields in Canada are estimated to average 42.2 bushels per acre for a total crop of 8.3 million tonnes. The previous estimate in August was 7.74 million tonnes. It’s worth noting that average yields in Ontario will hit a new record of 49.3 bushels per acre. That’s a full bushel better than the previous record set in 2012.

For corn, StatsCan’s satellites estimate a 14.3 million tonnes. August’s estimate from StatsCan was 13.65 million tonnes while the USDA is currently calling for a 13.9-million-tonne crop. Worth noting is that Ontario’s average corn yields are estimated at 169.5 bushels per acre. The record was 170.6 set in 2015.

For oats, the satellites suggest 3.8 million tonnes of production in Canada this year, versus the previous survey-based estimate of just under 3.7 million tonnes. Rye production was also similar at 333,6000 MT this turn versus the August estimate of 326,000 MT. The satellite estimate for barley production was very like August’s at 7.3 million tonnes. While the numbers on barley are somewhat bearish, there has been some improvement in the price of late. For the past 2 weeks we’ve been recommending to lock in some movement of either feed grains (i.e., feed barley or feed wheat) and winter cereals (i.e., winter wheat or fall rye). It will put some cash in your pocket while we wait for better prices in oilseeds and milling wheat (Get your wheat tested! Know your grain!)

Lentils got a bigger boost, with the new estimate now at 2.44 million tonnes. In August, it was 2.29 million tonnes. On the pulses, peas production out of Canada was pegged at 3.86 million tonnes, only slightly higher from the 3.79 million tonnes previously estimate. The prices for peas are likely to trade sideways as ample global supplies curtail any “panic buying.” The main cause of the supply is increased production in the Black Sea, as well as 2 years of good monsoon rains in India.

Finally, the EU grain industry group Coceral says that the EU rapeseed crop might be larger than originally thought, but that the 2018/19 crop could also be large. Coceral is estimating this year’s EU rapeseed crop at 22.11 million tonnes. Last year’s crop was 20.55 million tonnes. Comparably, Strategie Grains’ estimate is 21.65million tonnes, the International Grains Council is at 21.8 million, the USDA is at 21.95, and the European Commission is at 21.86 million tonnes. The main catalyst behind Coceral’s estimate is that French and UK yields came in better than expected.

In France, a 5.48 million tonnes this was forecasted off average yields of nearly 64 bushels per acre. The official estimate of the European Commission’s agricultural meteorology unit, MARS, is just over 62 bushels per acre. In the UK, the harvest there is pegged at 2.17 million tonnes by Coceral thanks to yields jumping 25% year-over-year to 65.5 bushels per acre (the tops in the EU). MARS’ estimate is just 58 bushels per acre. Pretty big difference there. In Germany, Coceral is expecting average rapeseed yields to drop 12% year-over-year to roughly 56 bushels per acre for a 4.35 million-tonne crop. MARS has German average rapeseed yields at 61.

Considering where EU wheat prices are right now, more rapeseed is expected to get planted in 2018. The key contracts that the market is watching are the Paris-based November 2018 rapeseed price and wheat’s December 2018. The average ratio between these two “end-of-the-calendar-year” contracts Is usually 1.9, but today it sits above 2, suggesting more rapeseed in 2018. It’s also worth noting that the last couple of years, farmers have been unable to use certain seed and chemical treatments on their rapeseed crops. One would think this is a detriment to planting more acres. However, alternative insect management strategies are being employed, and it appears to be bringing the confidence back in to successfully grow a profitable rapeseed crop in Europe.

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