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Mixed fortunes for Canadian farmers…

Canadian farmers can’t take a trick this year…

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Canadian farmers produced the smallest canola crop in four years on the back of lower plantings and unusually wet autumn weather that left crops sitting in the paddock unharvested, the latest blow in a miserable year which started with the Chinese ban on canola imports.

The heavy snow and rain during harvest across the Canadian Prairies have left around 810,000 hectares of canola buried under snow until spring.

Crops that remain in the fields over the winter are subject to wildlife damage and moisture spoilage, but some of it can usually be salvaged and marketed at a discount in the spring. However, the need to harvest the previous crop once fields dry can seriously delay the commencement of the spring planting program in affected districts.

Statistics Canada released their Production of Principal Field Crops report last Friday the more than 700,000mt was dropped off the countries 2019/20 canola production. Estimated production came in at 18.65 million metric tonne (MMT), down 8.3 per cent on last season, and 2.9 per cent below the five-year average.

The total harvested area fell 8.8 per cent to 8.34 million hectares but yields did rise by 0.5 per cent compared to the 2018/19 season to 2.24 metric tonne per hectare.

Canada is the world’s biggest producer and exporter of canola, and the crop has long been regarded as the most profitable for the Canadian farmer. China, Japan and Mexico have traditionally been the key export destinations, with the seed primarily used for the production of cooking grade vegetable oil and canola meal for stockfeed rations.

In the absence of their largest export customer, demand has been falling, inventories have been rising, and prices have been lower as a result. Nonetheless, Canadian farmers are adjusting to the reality of life without China by working on cutting costs, improving efficiency and modifying crop rotations to decrease their reliance on canola.

As of November 24, Canadian canola exports had decreased by 9.5 per cent compared to a year earlier. But the decline is much less than many had feared and is a reflection of the success in finding alternative consumers for the surplus export stocks. Several European countries are importing more Canadian canola for biofuel production, and shipments to the Middle East have also picked up in recent months.

In terms of wheat, Statistics Canada estimated current season production at 32.3MMT, a minor reduction of 140,000 compared to their previous all wheat production forecast. This put production around 0.5 per cent higher than last season and 6.5 per cent above the five-year average.

While all wheat classes were revised lower compared to the September estimates, it was a year-on-year rebound in spring wheat production that drove wheat production higher overall.

Spring wheat production is forecast to rise by 7.2 per cent to 25.67MMT, the largest spring wheat crop in six years. The harvested area is estimated to be 6.5 per cent higher than last year, and the average yield of 3.48 metric tonne per hectare is slightly higher than the 2018 harvest.

Canada western red spring makes up 86.4 per cent of all spring wheat produced, up from 83.7 per cent in 2018/19, well above both the five and ten-year averages. Durum production was estimated to fall by 13.4 per cent to 4.98MMT, with a year-on-year increase in yield unable to offset a 22.6 per cent decline in the harvested area.

Barley estimates were revised higher compared to those released earlier in the northern hemisphere autumn. Statistics Canada put total production at 10.38MMT, an increase of 23.9 per cent over the 2018 number and 28.2 per cent above the five-year average. The increase was due to harvested area, up by 13.9 per cent, and yields, which rose by nearly 9 per cent to 3.81metric tonnes per hectare.

Agriculture and Agri-Food Canada are suggesting that year-on-year barley stocks will double, quite a bearish scenario, particularly for the Canadian farmer. Up to the end of November total barley exports for the current marketing year sat just north of 600,000 metric tonne, 4.4 per cent behind the 2018/19 pace. With the world well supplied for malting barley requirements, feed channels would appear to be the best hope of boosting exports.

Even the humble oat, now considered a ‘superfood’ in eateries across the globe, benefitted from the swing away from canola with the crop 21 per cent up on last year, at 4.16MMT, and 23.7 per cent above the five-year average.

Statistics Canada revised both the soybean and corn numbers lower compared to their September estimates. Soybean production came in at 6.05MMT, down 18.5 per cent from 2018 and 11.7 per cent below the five-year average. The corn crop is forecast at 13.40MMT, down 3.5 per cent from 2018, just below the five-year average. 

Unlike Australia, where a dry season has decimated national grain production, in Canada the wet has made 2019 a year to forget. Not only has it severely hampered the winter crop harvest, summer crop farmers are calling it the ugly trifecta. Late planting, far too much rain and snow through harvest and high-moisture grain meaning substantial drying costs will be incurred to bring it down to a market acceptable level. On top of the unharvested winter crop area, the adverse autumn weather has left many farmers facing unharvested corn paddocks into December and possibly beyond. Of all the issues the Canadian farmer has faced this year corn left standing in the paddock deep into the winter is perhaps the one they dread most.

Australian winter crop teetering as it enters spring…

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The annual Pro Farmer Crop Tour was conducted across seven of the most important corn and soybean states in the US last week. The results were released after the markets closed on Friday and, as most market pundits expected, came in lower than the recent USDA production estimates.

This year’s tour had more than 125 scouts representing 12 countries and included farmers, agribusiness experts, media, government and representatives of the financial industry. The scouts sampled around 3000 individual fields along 20 pre-determined routes across Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio and South Dakota.

Pro Farmer estimates the average US corn yield at 163.3 bushels per acre (bu/ac) or 10.25 metric tonne per hectare (MT/ha). This was 6.2 bu/ac (0.39 MT/ha), or 3.7 per cent lower than the most recent USDA forecast of 169.5 bu/ac (10.64 MH/ha). Total US corn production came in at 13.358 billion bushels, or 339.3 million metric tonne (MMT).
The soybean production estimate came in at 3.497 billion bushels or 95.2MMT. This was based on an average national yield of 46.1 bu/ac (2.89 MT/ha), 4.9 per cent, or 2.4 bu/ac (0.15 MT/ha) lower than the latest USDA mark of 48.5 bu/ac (3.04 MT/ha).

One key observation from the tour was the maturity of the corn crop. Many scouts put it up to three weeks behind the average for this time of the year in the regions worst affected by the delayed sowing. The eastern reaches of the corn belt were the worst affected, but the crop certainly improved in quality and maturity as the tour moved west.
The forecast for cooler weather in coming weeks will slow the maturity of the crop even more. With autumn fast approaching, the days are getting shorter, and the average daily temperatures are on the decline. This raises the concern of early frosts and the potential impact on final yields.

Here in Australia, spring is almost upon us. As the days get longer and average day temperatures increase the evapotranspiration rate of each plant rises significantly, increasing moisture demand of the maturing crop. The possibility of frost also becomes a significant production risk as the crop moves into its reproductive phase.

Rainfall last week has continued the hand-to-mouth pattern evident across most of Victoria, South Australia and Western Australia this season. The falls were generally less than 10mm with most of the more marginal cropping regions receiving less than 5mm. New South Wales didn’t fare as well with some minor falls limited to districts south of the Murrumbidgee River. Central New South Wales, northern New South Wales and all of the Queensland cropping areas received absolutely nothing.

Victoria is the pick of the states at the moment, with forecasts suggesting average to slightly above average production. All but the north-west corner has received at least 25mm of rainfall so far this month. That said, the picture is not uniform across the entire state. There are parts of the Western Districts that are too wet and conversely a significant portion of the Mallee is starting to struggle due to lack of in-crop rainfall.

In South Australia, it is also a tale of two stories. The South East, lower Mid-North, lower Yorke Peninsula and the lower Eyre Peninsula are all tracking along quite nicely, but the more northern production areas have only been catching the edge of each change and have been struggling for almost the entire season.
Primary Industries and Regions South Australia (PIRSA) released their latest crop estimates last week with the wheat crop currently estimated at 4.8MMT and barley at 2.2MMT. This would appear to be extremely optimistic based on the current state of the crop.

In Western Australia, most grain growers are in the game but, overall, the crop is running around three weeks behind average. The crop went in on time, but most of it was dry sown. The break didn’t come until late in the first week of June, so germination was delayed accordingly. Canola appears to have lost the most potential with poor germination in many paddocks and flowering running very late, especially in the Kwinana and Geraldton zones.

Southern New South Wales is starting to feel the pinch. Most of the crop south of a horizontal line through West Wyalong was planted, but rainfall registrations in most regions have been well below average through July and August. The crops in many areas are showing signs of stress and production potential is falling quickly.
Save for a few isolated areas, crop prospects in New South Wales north of that line are a disaster. Much of central and northern New South Wales have had less rainfall year-to-date than at the same time in 2018. Southern Queensland is no better. Less than 30 per cent of the crop was planted, and less than half of that still has some prospect of harvesting more than next years seed requirements, assuming adequate spring rainfall is forthcoming.

The big outlier across the entire country this year is the size of the area that will be cut for hay. In Western Australia, livestock producers have been forced to feed for a much longer period this year as the break came late and ensuing pasture growth was slow. Reserves have been depleted as a result and growers will be looking to restock.

The situation in the eastern states is far more dire. It was dry across all eastern states last year, and hay stocks were not replenished last spring. Back-to-back droughts in central and northern New South Wales and southern Queensland has sustained hay prices at extremely high levels for an unprecedented length of time.

For those doing the calculations, the high prices are certainly providing a significant incentive in many regions to minimise production risk by cutting their crops for hay rather than carrying through to harvest. This is especially the case where the crops are already under moisture stress and potential grain production is decreasing.

The entire Australian winter crop area is currently behind the eight ball in terms of year-to-date rainfall. While the drought area on the east coast is currently less than what it was last year, much lower production prospects in Western Australia and high demand for hay across the entire country means that above-average rainfall and a kind spring will be required to ensure that this season’s domestic winter crop production exceeds that of 2018/19.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.

Weekly Report 9/5/16

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BEANS/CANOLA

July-16 Chicago soybean futures made strong gains as the market was boosted by further confirmation of crop damage in Argentina. Settling at 1034.6 US¢/bu.

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Canola futures followed soybeans closing CA$510.5/t for the week.

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The fallout from flooding in Argentina continues to buoy soybean markets. Soybean prices gained following further confirmation of crop losses in Argentina and the US reported strong soybean export sales for the time of year.

An estimated 0.79Mha of Argentine soybeans have been lost due to the heavy rain in April according to the Buenos Aries Grain Exchange (BAGE). On top of earlier losses of 0.75Mha caused by previous weather issues, over 7% of the planted area has now been lost. Though BAGE maintained its output forecast at 56Mt, the latest report did not rule out further adjustments, with quality and harvest concerns affecting a further 0.7Mha.

Drier weather last week allowed the Argentine soybean harvest to progress, with 42% of the area now harvested, up from 24% a week ago. However this is still behind the 69% complete a year ago (BAGE)

Canadian canola stocks were reported last week at 7.49 million mt, down 10% year on year, reflecting a smaller crop and positive exports. Planting of the 2016 crop is ahead of average in key provinces.

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Australian canola production could reach 3.3Mt in 2016/17. This would be 10% higher than the 2015/16 crop.

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To read the full report click the below link

Weekly Report 16_05_09

Weekly Report 8/4/16

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BARLEY/CORN

Unlike Wheat, Chicago May-16 corn futures closed up on the week. The increase is thought to be prices recovering from the previous week’s losses due to the USDA report release and poor US planting conditions.

Corn settled at 361.4 US¢/bu, up 10 US¢/bu for the week.

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Argentina’s corn sowings for 2016/17 is forecast to increase to 4.2Mha in light of policy changes. The corn area is expected to have a year-on-year increase of 24%.

The change is due to farmers being more incentivised to plant corn, because of new policies and better returns. The changes in policy include the elimination of export taxes and limitations for corn and wheat. Also with better crop practices, i.e. Crop rotations after years of back to back plantings of soybeans and improved seed technology, yields are expected to be high.

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Following on from last month’s announcement of China scrapping its 9 year corn stockpiling scheme, China’s ministry of agriculture is planning on reducing the area planted to corn by 3.3 million ha in favour of increased soybean plantings.

To read the full report click the below link.

Weekly Report 16_04_09

 

Weekly Report 12/3/16

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BEANS/CANOLA

Chicago May-16 soybean rallied and settled at 889.2 US¢/bu on Friday, the sharp rise owing to strong soybean oil exports.

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Canola followed soybean over the week with ICE Canola March 16 finishing at CA$465.3 up CA$13/t for the week.

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Last week’s WASDE report saw US ending stocks at 12.5 million mt a 272,000t increase, on account of lower domestic demand. However on a global scale ending stocks were reduced to 79 million mt (still a record.)

The strength of the Brazilian real, as well as strong demand for US soybeans helped to support US soybean prices last week. On Friday, the Brazilian real rose to an over six month high against the dollar, reducing the relative competitiveness of Brazilian exports. A planned trucking strike in Brazil failed to materialize into anything meaningful. There were no reports of any disruptions. Another supporting factor has been delays faced by soybean shipments in Brazil, with ship line-ups of up to 57 days reported at southern Ports.

With Brazilian harvest now at 41% complete the Brazilian government crop supply agency Conab lifted its forecast for soybean production last week to a record 101.2Mt. The latest forecast is 250Kt higher than January’s forecast, on account of gains in area planted and yields.

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To read the full report please click the below link.

Weekly Report 16_03_12

Weekly Report 5/3/16

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BEANS/CANOLA

Chicago May-16 soybean prices increased 1% and settled at 863.6 US¢/bu on Friday, as the sharp rise in Brazilian Real hurts their export prospects, and also found support on the back of weather concerns in the US.

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Canola took a huge knock over the week with ICE Canola March 16 finishing at CA$452.3 up CA$4.5/t for the week.

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Although the international markets saw increases last week, there is still growing concerns that the South American crop could limit gains in the near term.

With the Brazilian Soybean harvest gathering momentum and 54% complete. Informa has increased the Brazilian soybean crop to 101.3 million mt up 800,000t from their previous estimate.

The Argentine soybean crop has benefited from the recent rainfall and the crop is now well into their flowering period and pod fill stages. Informa lowered the Argentine production by 1 million mt to 58 million mt.

COFCO estimate Chinese soybean imports could reach 83 million mt, due to improved margins on the pig production, This estimate is above the 80.5 million mt estimated by the USDA.

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To read the full report click the link below.

Weekly Report 16_03_04

Weekly Report 2/1/16

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CORN/BARLEY

In a subdued finish to 2015 corn hit new contract lows of US$3.57 during the week.

March 16 CBOT corn futures closed lower at US$3.58 per bushel down 6.8 Usc/bu for the week.

To avoid national shortages and to slow down rising prices, India will import 0.5Mt of duty free corn, the country’s first overseas imports in 16 years. For the second year in a row, severe drought in India has hindered domestic output. India traditionally is a major exporter of corn to Southeast Asia. The switch in the country’s position could give more trade to other large corn exporters such as US, Brazil and Argentina.

Severe drought conditions currently persist in South Africa is raising concerns, they may have to import corn as early as May if conditions do not improve.

BEANS/CANOLA

Chicago May-16 soybean prices closed at 865.6 USc/bu, down 15Usc/bu in comparison to the previous week.

The condition of Ukraine’s winter rapeseed crop was little changed in the week ending 24 December. A marginal improvement (of 0.4% week-on-week), took the proportion of the crop rated good/satisfactory to 68.6%, down from 80.4% at the same point in time last year.

One of the watch points for oilseed markets over the last week has been the impact of improved weather in Brazil. While dryness remains widespread throughout stretches of northern and north-western Brazil, rains over the last week have helped to improve soil moisture. This has led to pressure for US soybean prices. However, additional rains are still needed to curb dryness in key growing regions.

To read the full report please click the below link.

Weekly Report 16_01_02

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