LANGHAM, Sask. — Now is not the time to be pricing new crop, says a markets analyst.
“I don’t want to be selling a darn thing right now,” said Mike Jubinville, analyst with ProFarmer Canada.
“Right now is one of those times you just sit on your hands and you wait.”
Grain markets have tumbled since the end of May due to uncertainty caused by escalating trade tensions between the United States and some of its major trade partners.
“Uncertainty breeds fear and fear breeds selling,” he told attendees of the 2018 Ag in Motion outdoor farm show near Saskatoon.
But fundamentals suggest grain prices should be higher and it’s only a matter of time before markets sort it out.
“I suspect we’re probably going to see better opportunities in the pricing environment as the new crop marketing year starts to get underway,” he said.
Jubinville was brought on stage as a surprise guest at the AIM show, with the announcement that Glacier FarmMedia has bought his company.
He will continue to provide market information and analysis to ProFarmer customers while working on other projects with Glacier. The Western Producer is owned by Glacier FarmMedia.
One reason for his optimism for a price rebound is that commodity markets in general have come off the 2016 lows and have been trending higher.
Jubinville also sees encouraging signs when looking at the supply and demand fundamentals for corn, one of the “kings” of the commodities.
There is strong demand for U.S. corn in ethanol, feed and export markets. Poor crops in Argentina and Brazil are boosting demand for U.S. corn.
The U.S. Department of Agriculture recently reduced its 2018-19 ending stocks estimate to 1.55 billion bushels, down from 2.03 billion the previous year.
The December futures contract was on a nice upward trend until it took a “significant and dramatic” downturn in June when the U.S. started implementing tariffs.
Soybeans have been trading in a sideways trend for almost four years. Jubinville showed a chart going back decades revealing a pattern of prices spiking up, spiking down, trading sideways for a few years and then repeating the cycle.
“History suggests out of a sideways trend tends to come the next rally. We just don’t know the timing of that,” he said.
The USDA recently dropped its 2018-19 U.S. soybean export projection by 250 million bushels resulting in a bloated 580-million-bushel carryout.
Soybean prices have plummeted to $8.50 per bushel. The adjustment was due to China applying a 25 percent import tariff on U.S. soybeans.
Jubinville said the market is oversold and a correction is coming. He noted that U.S. soybeans are $1 to $1.50 per bushel cheaper than Brazilian soybeans.
The European Union has stopped sourcing soybeans from South America and is buying up the bargain beans from the U.S.
Canola is selling for a $75 to $80 per tonne premium to U.S. soybeans but is price competitive with Brazilian beans.
He is forecasting a record canola export program of 12 million tonnes in 2018-19. Domestic crush has set records the last two years and he doesn’t see that changing.
That’s why Jubinville is being a contrarian and forecasting a reduction in ending stocks for the oilseed.
He thinks canola will trade in the range of $10 to $12 per bushel in 2018-19 with a few months of going up followed by a few months of trending down.
Jubinville stressed that he is not calling for a bullish outlook but he thinks prices will be better in the harvest and post-harvest period.
“Selling today doesn’t make a lot of sense,” he said.