Today’s not a great day, if you’re wheat. Your value just dropped about 12 cents per bushel.
That’s the biggest big crop result from today’s USDA report in a bad way. U.S. all wheat ending stocks are estimated at 43 million bushels above what USDA thought last month, and new crop wheat stocks should be 1.09 billion bushels. The growth in old crop and new crop wheat stocks surprised markets and caused the intraday slump you see on the chart below:
Most wheat futures contracts are down 10 to 14 cents on the news.
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Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
A better finding of USDA is its continuing belief that U.S. corn yields will be about 163.5 bushels per acre. That’s good news, because everyone on the producer side has been worried that USDA might boost its yield estimates because the crop looks so darned good right now. The fact that it didn’t boost yield estimates is passively bullish and enough to restrain a few other numbers that were a lil’bit bearish.
So this report isn’t a big deal, really.
So let me catch you up with the canaryseed situation: I was talking to a Canadian Food Inspection Agency official this morning and he filled me in on the state of Canada/Mexico canaryseed trade. The Mexicans have, indeed, imposed a zero tolerance policy for noxious weeds – including wild buckwheat and a bunch of other common prairie weeds – on canaryseed imports. Inspectors are going through Canadian shipments and if they find a single banned weed seed, they turn back the shipment. Unlike the Chinese, who were quite gentlemanly when they unreasonably closed their market to us by giving us about a month’s notice, the Mexicans just dropped a guillotine on anything incoming and in-transit, badly costing exporters who had no idea this was coming.
Apparently, a year ago Mexico raised similar concerns with us, but we reassured them everything we ship is cleaned, so they had little to worry about.
So why’s this happening? That’s not something CFIA would speculate upon, and I didn’t expect them to. But I heard a couple of conspiracy theories yesterday from people in the industry, and while they don’t contain second or third gunmen on the knoll, they are worth repeating, just so we have something to pointlessly chatter about. None of the following are worth believing, because we have no evidence that any of them are true. And I know a couple aren’t true, because I just made them up:
1) Mexican officials are just looking for bribes. So they throw up an obstacle, and money makes it melt.
2) Certain importers want to lock down the market and keep out competitors’ product, so they arrange for their competitors’ shipments to be strip-searched while theirs sail through.
3) The Mexican dog breeding industry is trying to squeeze out the birds-in-cages pet industry and is trying to boost birdfood prices to make dog food look cheaper.
4) Mexico’s just PO’d about its World Cup performance and being grouchy in general.
5) A Canadian exporter dumped some badly cleaned, weedy stuff into Mexico and buyers are outraged. Mexican officials are letting Canadians know they can’t be treated badly.
6) On the way through Roswell, New Mexico, agents of the alien conspiracy slipped alien DNA into traincars of Canadian canaryseed, hoping they would create Mexican alien-bird hybrids when fed to canaries, parrots and such. Mexican officials got wise to the devious plan and stopped the alien infection at the border.
As I said, none of the above are likely to be true, but it’s always fun to chatter about these things because none of us are ever likely to know precisely why the Mexicans are doing this, or won’t know for a while. So all we can do is guess. (I’m quite proud of inventing #6. I’m not usually this creative in the morning.)
