With a wind chill below Ð40 C as I write this, let’s dream of spring for a while.
Spring means seeding and most Canadian and American farmers are trying to adjust their rotations to make the most of the post-harvest market.
Soybean and canola prices were rising early this week when attention shifted to dry weather in Argentina.
Oilseed prices have risen even though the market expects a record large soybean crop in South America.
If anything happens to reduce that crop, then the already tight world soy supply situation could worsen, driving prices higher.
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EU crop prospects are vastly improved, which could mean fewer canola and durum imports from Canada.
The reverse would also be true, but for now, all eyes are on yield-limiting hot, dry weather in Argentina.
Also supporting this bullish attitude was speculation that the United States might tighten restrictions on the use of animal remains in hog and poultry feeds.
A ban would boost the demand for soymeal as a high-protein supplement.
So soybean prospects look good, but so does corn ever since the U.S. Department of Agriculture cuts is forecast of American corn ending stocks.
Corn futures have risen about 10 percent since the USDA slashed its ending stocks estimate to 24.91 million tonnes from 32.99 million in December.
Although the 2003 corn crop was record large, the demand from livestock feeders, exporters and ethanol producers is such that the market is signaling the need for more acres and bushels.
Wheat is the market that just doesn’t catch fire no matter how much it is stoked.
U.S. exports are running almost 25 percent ahead of last year’s pace. The U.S. winter crop area is smaller than expected and is mostly dry.
A group of Chinese wheat buyers is due in the U.S. in early February. But markets aren’t excited by the Chinese visit and wheat prices drift lower.
Nor is there much joy in durum because the key global demand region, North Africa, has had excellent moisture.
It’s still early. The Chinese and the weather can surprise us.
But agricultural analyst firm Sparks forecasts American farmers will boost soybeans and corn acres a little, hold steady on spring wheat and cut other cereals such as durum, barley and oats.
Canadian farmers are likely to follow a similar path, planting more canola and scaling back durum and some pulse and specialty crops.
