(Wheat's week to shine.)
No one has a busier schedule right now, we get it. But with an incredible array of bids at your fingertips, Farmbucks helps strike an impressive sale anytime, anywhere. Do you really wanna impress your mother on Mother's Day? Knock her socks off when you sell grain at unbelievable prices. After all, mom didn’t raise no fool!
Weekly Market Recap:
What a week! The week started with a deep sell-off as markets were overbought. Bean oil led the way lower. China was out of the market most of the week while celebrating its Golden Week holiday. Its zero-tolerance COVID policy is having a big effect on curbing demand. Fund money also fled, taking profits. Mid-week markets turned around as attention turned back to the impacts the war is having on global grain and energy flows. This year's weather market will be amplified due to tight supplies worldwide. It will be a critical northern hemisphere growing season.
Today, StatCan had a tiny bullish surprise with March 31 Canadian canola stocks coming in at 3.94 MMT vs 4.58 MMT trade guess and wheat stocks at 10.1 MMT vs 10.4 MMT.
Next Thursday, May 12, we have a WASDE report with updated world stocks and balance sheet (not acres), so watch out for news on that, too!
Deals of the week:
$27.27/bu old-crop canola, $24.70/bu new-crop canola
$15.59/bu old crop, $14.75/bu new-crop CWRS
Canola: Canola took a hard hit early in the week before recovering most losses. Even with the bullish StatCan report last week (with lower intended seeded acres) and delayed planting progress, the markets were sharply lower Monday and Tuesday on profit-taking and fund liquidation. There was a German proposal to cut biofuels due to rising food costs and ideas that India's palm oil production will outpace consumption and storage forcing them to resume exports sooner rather than later. Vegetable oil markets took a breather as it awaits fresh news. Markets are waiting to see more. More on China's demand, if and when Indonesia will revise its palm oil export ban, the direction of crude oil and biofuel demand, seeding progress, weather and more. One thing we know is that there's little room for any hiccups in production. Cash bids are noticeably lower this week, about $0.70-0.90/bu this week compared to last week's highs, but remember they are still at some exceptionally high levels.
Soybean futures stumbled this week mainly due to warmer and drier temperatures forecasted for the main U.S. growing areas next week. There is additional downside risk if more corn acres are seeded to soybeans in the U.S. Soybean meal fell sharply, too. On the other side, U.S. weekly export sales have been strong, South American soybean production wasn't as big as it could have been, vegetable oil markets look to be holding and we have a lack of sunflower oil out of Ukraine. This week 8% of U.S. beans were planted (same as trade expectations, behind 28% of average).
Wheat: Strong tone in wheat markets right now. Three main factors influencing them are: India's rumoured export bans, the war in Ukraine and bad U.S. weather. Wheat surged higher after India cut its estimated wheat output from 111MMT to 105 MMT (there are rumours that it may even drop below 100 MMT). Record high heat levels received in March caused its wheat to shrivel with lesser weights. Rumours also swirled that it may even impose export restrictions. Remember, India was the one that said it could fill in the void that Ukrainian wheat would otherwise cover. Wheat markets surged higher on the news, which illustrates how fragile and susceptible markets are to headlines. There is also a dry weather forecast over France and Germany in the coming weeks.
Kansas wheat led the way higher as traders start to realize the effects of the U.S. drought cannot be reversed on their winter wheat crop and that today’s rains are too little too late. U.S. winter wheat rating remained unchanged at 27% good-excellent, despite recent rainfall (trade expected 28%), however the poor to very poor rose four points to 43%.
No break for the northern plains (spring wheat growing areas). Supporting the Minneapolis market is the continuing wet and cold weather forecasted over the northern Plains where spring wheat planting is heavily delayed. Spring wheat planting progress was at 19% as of May 1 (trade expected 20%, behind the 28% average). Minn. futures is showing impressive strength, with July futures breaking above resistance and reaching a new contract high today at $12.23 today.
Wheat is on the move! Be sure to check up on cash bids, get targets in and watch wheat markets closely the coming weeks!
Barley: Even though StatCan reported barley acres to be down 9.7% vs last year, it’s still a large amount of acres going in. Feed barley bids have climbed to $10/bu in southern Alberta this week as worries about feed supplies loom. Two words: Watch corn.
Corn markets are on the defensive but still relatively strong. Much of the Midwest has warmer temperatures and a drier forecast coming next week, hitting the 90°F (about 32°C). This opens up a nice window to get acres in the ground in the Eastern corn belt. This week, only 14% of U.S. corn was planted (trade expected 16%, 5-year pace is 33%), the slowest planting pace since 2013. There have been massive delays due to cold wet weather. Current seeding delays are not enough to definitely impact yields but it does lower any trade expectations for higher corn acres (which, remember, came in surprisingly low). Continue watching the weather.
Lingering in the background, there is worry that if a big portion of the crop is planted at the same time and La Niña brings drought across the Central/Midwest U.S. in later summer, it may hit and damage the entire crop badly (versus a spread out planting window and corn at different stages). This will be something to watch.
Brazilian Safrinha (second) corn crop still deteriorating with main growing areas forecasted to remain dry over the next couple of weeks. The USDA's previous estimate for total corn production in Brazil was about 116 MMT but with the added dryness, this is expected to be revised lower. Certain private analysts predict that the crop size is closer to 100-107MMT. Since Brazil won't be able to completely fill the large void left by losing Ukraine as a major exporter, additional stress will be on growing a big crop in the U.S.
Peas: Quiet week for peas. Mostly unchanged. Waiting on more demand, planting progress and weather news.
Oats: Oat futures have slid down since mid-April. Looks like traders are comfortable with the high acreage that StatCan reported (a 16.6% increase in oat acres, almost four million acres). This would represent the largest acres in the past 10 years. We shall see if farmers actually put that many in the ground. As mentioned last week, if you have old-crop oats to sell, shop around, there are still some good opportunities to sell them before old-crop prices fall to new-crop values.
Around the farm: Ready and waiting to go seeding (pretty much). Slight rains slotted today and cold weather coming back in our forecast before it warms up mid-next week. We have been busy this week, prepping fields and installing some prototype stuff on our drill. Even though we aren’t in the fields just yet, there's never a shortage of jobs to do around here. I’m thinking we might start Monday (weather pending).
In addition, I'm working on multiple new, upcoming, super-exciting, game-changing Farmbucks upgrades and features. I'm stoked because I, as a farmer, want it! I'll let you know when we start releasing them! With all your support, Farmbucks will only grow and get better, so thank you!!!
P.S. Don't be afraid to also send me a quick email with suggestions :)
Safe seeding out there!