Weather — not demand — will determine if crop prices overcome range limits

For most of Canada, producers are playing the waiting game. They’re keeping an eye on their crops and are getting ready for harvest, but they might be wondering what the markets are doing and how they’ll market their commodities.

Canola is the go-to crop for profitability on the Prairies. Some areas definitely have enough moisture, while others maybe have too much. Canola prices are pretty range-bound currently between $470 and $480 per tonne. So what’s it going to take to get out of this rangebound trade?

“The markets are all about weather right now and the grower is cautious,” Errol Anderson, of ProMarket Communications, based at Calgary, AB. If there were to be a headwind, prices could get up into $485 to $488 per tonne, but the only way to get out of being rangebound is a weather scare, says Anderson, and the demand side won’t pull us out of this before harvest market updates.

Moving on the spring wheat, “I think we have seen some form of a bottom in some regards in that Russia is starting to have some difficulties with dryness in the southern region,” says Anderson. But he sees the issue as more of a Chicago or Kansas City market issue, and if the rebound were felt, it’d be by the Chicago wheat market. For Canada, we’re kind of caught — for grade one CWRS, we can expect between the $5.75 to $6.30 per bushel range. (more below player)

China has helped us out with the pea market but we can expect a dive down into the harvest lows once the combines are going. Yellows may dip down to the $6.00 to $6.50 range, but post-harvest, both yellows and greens markets will recover. As for lentils, India will be more active this year, Anderson is expecting to be bullish with red lentils in particular.

The weather hasn’t been as good in some of these key pulse crop consuming countries and they’ll might soon start to look to Canada for supplies, regardless of having tariffs or not. “There’s tariffs until you need the product,” says Anderson, “If there are weather issues, we won’t hear about tariffs much.”

Yield predictions for corn are between 175 and 180 bushels per acre yield this year according to Anderson. Again, only a weather issue will deter us, says Anderson and the market may bottom sometime in fall for the December contract to somewhere around 3.23 per bushel.

There may be a tug on the soybean market, possibly getting down to $8.50 per bushel, since corn and soybeans go hand in hand — they can’t really be separated. “They have to respect each other, you can’t really divorce them too far because it’ll skew the acres for next year,” says Anderson.

The Canadian dollar is critical for the net price that farmers are getting for their commodities. Going against the wave of most people’s thoughts, Anderson thinks it may move above 0.75 maybe even 0.766, due to weakness in the U.S. economy. If the U.S. dollar falls back it will push alternate currencies up, including Canada’s.

Seasonal weakness in demand for cattle is coming into the market and the fat market has had some struggles — starting at $1.50 per pound down to $1.25 per pound, but bouncing back into $1.35 per pound. The feeder market is holding up well because of support from good pasture conditions; hinging on yet again, the weather.

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