Markets subdued as producers begin spring seeding

Following a dry winter, most of the Canadian Prairies could do with a good rain but many American producers wish for drier weather.

Long range forecasts show potential for rain on the Prairies at the end of this month or early May.

Meanwhile, moisture south of the border has been of the frozen type.

A large part of the central United States was slammed by a second vicious spring blizzard last week, following the so-called bomb cyclone in March that dumped huge amounts of snow, killed livestock and led to major flooding.

Last week’s storm was expected to cause less flooding because fields had warmed up enough to allow the water to soak into the soil.

However, many farmers in the region remain concerned about a potential late start to seeding.

That concern had not registered much on crop markets as of last week.

Corn and soybeans remain weighed down by strong export market competition from South America and the expectation of burdensome year-end stocks in the U.S.

The big commodity speculative funds are weighted heavily to the short side of the market, meaning they expect further price declines.

The uncertainty of whether the administration of U.S. President Donald Trump and China will ever fully resolve their trade disputes also continues to depress the market. The administration last week said it was making progress but the president and his officials often make inflated boasts. Until the two leaders actually meet to sign an accord all the talk is only so much hot air.

This is unfortunate because I believe little progress will be made on the disputes between Canada and China, including the canola stoppage, until the two superpowers settle their differences.

Seeding concerns did help Minneapolis spring wheat futures bounce back a little late last week. All the wheat contracts have been depressed since mid-March when the market’s focus was on the good condition of the winter wheat crop and expectations for ample year end U.S. stocks.

On April 8 the U.S. Department of Agriculture said 60 percent of the winter wheat crop was rated good to excellent, up from only 30 percent last year at the same time and 53 percent two years ago and the 10 year average of 46 percent.

At this early stage, the winter wheat crop looks like it could have excellent yields.

While no one has pressed the panic button yet on U.S. spring planting, we are getting close to the time when seeding usually begins in earnest. On average, two-thirds of the U.S. spring wheat crop is planted by mid-May. By that point, 63 percent of the corn and 26 percent of the soybeans are also in the ground.

The long range forecast shows the rest of April will likely be cooler than normal in much of the U.S Plains and Midwest but things should get drier in the second half of the month in areas west of the Mississippi.

As for the rest of the world, the USDA’s weekly weather and crop bulletin provides a round-up of conditions.

Across the Atlantic, dry areas in Southern Europe and western North Africa got welcome showers.

The rain was not enough to prevent drought damage to Morocco’s wheat and durum but it slowed the deterioration. Morocco is a major buyer of Canadian durum.

The other two big durum buyers in North Africa, Algeria and Tunisia, do not have moisture problems. Overall it does not look like North Africa will have a huge year for durum imports.

At this early point, forecasters expect Europe’s cereal production will bounce back from last year’s drought but there is no indication of a bumper crop. The rapeseed crop has suffered the most. Reports suggest about 25 percent of rapeseed in Germany did not get seeded last fall because of dry soil.

Moisture has improved in northern Europe but it is dry in southern areas, particularly in the southeast.

The dry spring continues eastward into Ukraine but it is early yet. There are no problems flagged in Russia yet.

Recent showers in some areas of eastern Australia brought marginal relief but much of the country remains very dry as it approaches its winter crop seeding season.

It is a bit dry in eastern China’s winter wheat region and showers would be welcome.

Turning to livestock, the news about China’s African swine fever outbreak continues to build.

The USDA said that in the week to April 4, China bought 77,732 tonnes of U.S pork, the largest weekly sale in records that go back to 2013.

A Rabobank forecast said 150 to 200 million pigs could be culled or die because of ASF and the world’s largest hog herd could see pork production drop by 30 percent this year or about 16 million tonnes.

This could lead to big increases in Chinese imports of all meat and seafood.

It would also likely depress demand for soybean meal and feed grain.

Chicago hog futures have rallied about 25 percent since early March.

Canadian pork exports to China in January were up 19 percent by volume, year over year.

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