Rain Falls. Markets Fall Too.
(Marketing holds the key.)
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Farmers are great at growing the best, highest yielding and highest quality crop possible but often marketing does not receive similar care and attention. That's where everything you have worked so hard for all year, comes to a head. Were you able to capture profits? There’s a common theme among market analysts this year: sell smaller amounts of your grain in more increments. I'm sure we can all agree that we want to have something to sell when wheat or canola make new highs (and if you read the newsletter, you know there have been new highs just recently).
Down week. USDA WASDE report was released Thursday which contained no market-moving surprises.
Canola: Futures falling back down as rain fell across most of the Prairies this week. However, this will not change the fact that canola supplies are still expected to be tight next year; in fact, some say even tighter than this year.
Of course, it’s important to also watch what soybeans and veg oil markets do. They all lost some strength this week however, the U.S. soybean crop is not off to a great start. Large areas are still dry and forecasted to remain so. This could light a fire under the market later down the road.
July futures have not been showing as much strength as Nov. futures and therefore lost some of its premium over the Nov. futures.
Old crop levels are hovering around $20/bu.
New crop levels are still up over $17/bu and some bids reached $18/bu earlier in the week.
Wheat: Down this week.
As a really good winter wheat crop begins to get harvested in the U.S. and enters commercial channels, you can expect seasonal pressure on the Kansas market.
Minneapolis wheat futures are all about the weather. If it rains, markets fall. If it stays dry, they climb. And not just a little bit … this week in a single trading session prices ranged by about 60 cents! It's a wild ride. More hot and dry weather can trump the current highs.
The biggest note to keep in the back of your mind is that there is lots of wheat in the world: The USDA forecast a world record for wheat production this year. Russia, Brazil, the EU increased their production numbers and there's a big winter wheat crop in the US.
Barley: Barley bids are bouncing around, slightly higher or lower.
Corn, barley’s leader, is worth noting. It has been bouncing around at a high level. The U.S. old crop ending stocks were also revised lower just yesterday. It has underlying strength based on increased ethanol production, higher exports and growing dryness concerns in the U.S. and Brazil's drought which keeps decreasing the size of its corn crop.
Another marker to pay attention to is China's relationship with Australia. As you know, China did not buy barley from Australia last year (politics) and therefore bought up a ton of Canadian barley, driving up our prices. Well, it looks as though now the WTO has agreed to help the two resolve their differences. This most likely won’t happen overnight (just look at our ongoing canola battles) but if and when it does, it will obviously pressure our barley market.
Peas: A little action but not much. China has been quiet lately (they did purchase most of our peas last year). Will be interesting to see if they come back looking for September exports and drive up prices like they did last year. We'll also see if Canada or the U.S. have any production threats come into play. We have noticed some buyers still looking for old crop peas and have had new crop yellow pea specials pop up - $10/bu for March and April 2022 delivery.
Around the farm: We are fighting the weather to get spraying done, which started with a rush at the beginning of the week. The plants grow fast but it seems the weeds grow even faster! We managed to get all of our first pass done, but not without a rain shower falling on the last two fields … grrrrr. (The weatherman said no chance of rain that day.) I wish I had a job I could be wrong on 90% of the time and still get paid! Anyhow, I went and re-sprayed some acres the next morning before more showers came our way later that day. The weather here is crazy, one field will have received an inch of rain and hail and just two miles down the road she’s dry as a bone. With the exception of yesterday, it rained a good portion of the day everywhere and we probably got a couple of inches from it. Things are wet but I'm hoping to get back spraying this weekend to do a second pass in my wheat. Oh and lucky me, I get all my children home to do it with me (they were a close contact to someone with COVID-19). Needless to say that their school year is pretty much a write-off. But looking at it with the glass half full … welcome summer!! That’s it for this week folks, hope you all got some moisture and good luck out there killing some weeds!
Cheers to another week!