Grains, oilseeds stage comeback
Grain and oilseed producers have endured a wave of bad market news this fall, but last week there was a break, at least for wheat and canola.
The United States Department of Agriculture’s November world supply and demand report dropped its predicted year-ending world stocks for wheat for 1996-97 by almost six million tonnes to 111 million tonnes.
That’s about halfway between ending stocks in 1994-95 of 118 million tonnes and the very tight 103 million tonnes in 1995-96.
The USDA dropped U.S. ending stocks to 11.8 million tonnes, down a million.
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This strengthened futures markets and also allowed the Canadian Wheat Board to boost its asking price for No. 1, 12.5 percent protein red spring wheat to $273 a tonne in store Vancouver, up from $258 the week before.
On Nov. 13, U.S. agriculture secretary Dan Glickman forecast higher wheat prices.
He said wheat prices appear to be too low in light of the comparatively tight supply.
Also, the European Commission’s director general and head of the farm budget said that European Union’s current grain export subsidies are much higher than forecast in the 1997 draft budget.
To avoid budget difficulties, the commission would therefore like to see subsidies fall, said David Roberts.
On Nov. 14, EU subsidies did drop a little.
But don’t look for miracles.
Argentina is conducting a pre-Christmas blowout sale.
It has lots of wheat and is dropping prices to move about five million tonnes by February to raise cash for the coming corn and soybean harvest season and to clear bin space.
Good news in oilseeds
Turning to oilseeds, there was more good news.
The USDA report increased is estimated soybean production by 2.4 percent as expected.
The department increased its estimate of crush and exports so the ending stocks did not increase.
The market viewed the news favorably and prices rose.
This added support to Winnipeg canola and we saw the January contract increase about $10 a tonne over the week before.
Other good news was that the Cargill crushing plant near Saskatoon has restarted after shutting down for several weeks because of poor profits.
Meanwhile, the loonie took a break from its recent climb and dropped below 75 cents U.S.
Most analysts predict it will rise above 78 cents U.S., but with last week’s events, the climb might be slower.
