Will pulse growers get a great gift of pea export movement in the new year? Will the Canadian dollar get back to tracking crude oil? Will soybeans have another tough year in Western Canada? Chuck Penner, of LeftField Commodity Research, joins RealAg Radio host Shaun Haney for a market melee full of holiday joy and only a tiny bit of cynicism.
To jump right in, a look back at 2018 proves that sometimes the issues pile on, and come from surprising sources. From drought stress, to trade wars, to tariff trouble, and now a cell phone company international scandal is factoring in to a volatile market. What’s ahead for canola, soy, pulses and the Canadian dollar? Penner says:
- Canola — Still under a soybean market hangover, where Presidents Trump and Xi play a major factor, but there’s room to gain versus soybean, Penner says. It’ll be a challenge. Farmers should see a narrower basis later in the winter. Will we see any major acre moves? Not likely, and numbers should hold strong. Really, until clubroot is your own problem, rotations will stay tight. Take your opportunities if prices pop to the good, he says.
- Pulses — Drought conditions in India are a factor, and weather will always take precedence over politics. There’s hope a spring election could shake up the tariff situation, but even a change in government may not actually change much. The weather, however, is an immediate issue and rains have missed core production areas. The next four to six weeks will be the driver of crop conditions, and harvest begins about March. Lentils are starting to see some March/April delivery (the easier win, as they face only a tariff), but peas have a quantitative tariff and that’s holding back movement. Penner says that may be dropped eventually but not until well into winter or very early spring.
- Soybeans —Brazil’s beans will be running full bore by February, so did China buy just enough U.S. beans to tide them over? Cynical Chuck says maybe. Basis has been ugly, and we quote it “barfed,” in Western and Eastern Canada. Up until the recent “good” soybean news, Canada held a small premium over the U.S. but that’s disappeared, and prices are back down now. In the west, acres will be well down in 2019, Penner predicts, as two wrecks have farmers looking for more stable cropping options.
And what about the Canadian dollar? Since President Trump’s inauguration, other factors have dominated the currency’s moves versus its close ties to crude oil in the past. Trade concerns with the U.S. and China have become the larger driver and influence, and that makes predicting which way the dollar goes that much more difficult.
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