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Most old-crop oilseed and grain prices fell last week after the United States Department of Agriculture forecast a lower level of world grain trade and higher ending stocks.
The canola March futures contract at the Winnipeg Commodity Exchange hit life-of-contract lows during the week, tugged down by the malaise that hit the Chicago soybean complex after the USDA report.
Compared to its January report, the USDA increased its estimate for American soybean ending stocks for the 1998-99 crop by 550,000 tonnes to 11.16 million, the highest in 13 years.
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As for the Brazilian soybean crop, the second largest in the world, the USDA increased its production forecast by one million tonnes to 30.5 million tonnes. It raised the Argentine crop by 500,000 tonnes to 18 million.
This raised fears of a price war between the U.S. and Brazil that could push ending stocks even higher.
“With the passage of time we’ll see an even larger crop in South America,” said Dan Basse, executive vice-president of AgResource Co. Therefore “USDA has a lot of fessing up to do. Soybean ending stocks could grow even larger and maybe end up at 500 million bushels (13.6 million tonnes).”
Basse was speaking as part of a panel assembled by the Chicago Board of Trade to comment on the report.
On March 12, Chicago March soybeans fell to $4.92 (U.S.) a bushel, the lowest since March 1987.
In wheat, the USDA cited slow progress on the aid package to Russia as the reason for lowering its U.S. wheat export number and boosting year-end stocks to 26.67 million tonnes, up 2.18 million tonnes.
It also increased its year-end stocks forecast for Canada and the European Union. It said world ending wheat stocks will be 128 million tonnes, up from 125 million in the January estimate.
“It signals we’re having trouble giving the wheat away,” said Basse referring to the attempt this winter to provide food aid to Russia, which included 1.5 million tonnes of U.S. wheat for donation and another 200,000 tonnes under credit terms.
Shipments of that wheat were slated to begin this month but traders and analysts have grown skeptical of the donation program following a temporary suspension by the EU in its shipment to Russia of donated commodities.
Only corn showed improvement, with better exports and lower year-end stocks forecast.
