The markets have stopped guessing what farmers planted this spring and are now watching the weather and checking out buyers, according to market analysts.
“It’s going to be weather from here on in Ð and demand,” said Benson Quinn GMS market analyst Ken Ball June 30.
Statistics Canada and the United States Department of Agriculture released updated surveys of crop acreages last week.
Wheat prices rose when USDA reported fewer spring wheat acres than it had predicted in March.
Canola prices softened when StatsCan reported farmers seeded more acres of the crop than expected this spring. News that soybean stocks are larger than most had expected also affected prices.
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Ball said the extra 700,000 acres of canola will remove some of the fear from buyers’ minds.
“We can have a little crop adversity now and the buyers really may not jump in to push all that hard,” said Ball. “They’ll see enough acres to comfortably supply the market given anything close to a normal crop. It’ll take a little bit of the edge off of weather rallies.”
Having adequate supplies of canola will allow prices to return to more predictable basis levels against other vegetable oil crops, Ball predicted.
Canola oil buyers will not be desperate, and other buyers will be able to buy the best-priced vegoils.
Since vegoils are not particularly weak right now, canola’s price held up well when the news about acreage came out.
“Canola, despite the extra acres, did not break that far,” said Ball.
Statcom Ltd. canola analyst Nolita Clyde said that an average yield of 26.3 bushels per acre is possible if good growing conditions continue. That, based on the StatsCan acreage number, would produce a crop of 6.6 to seven million tonnes.
Ball said canola buyers who were driven out of the market last year by high prices have returned.
“Interest in Canadian canola is quite good this year,” said Ball.
Soybean acreage, according to the USDA, fell by 105,000 acres from last year, making it the smallest acreage since 1998. But because of better growing conditions, the USDA expects harvested acreage to increase by one percent.
The USDA also released soybean stocks numbers on June 30. Prices dropped when it found significantly more soybeans in storage than expected. Old crop prices fell most as fears of a summer shortage faded.
The best news for prairie farmers in the USDA report was the reduced U.S. spring wheat acreage.
Wheat prices jumped on the news, but their gain was held back by the prospect of a large winter wheat crop.
The USDA also confirmed that U.S. canola acreage is 18 percent smaller than last year, and nine percent fewer acres should be harvested than last year. Dry bean acres were also confirmed down from last year.
The StatsCan survey confirmed analysts’ assumptions that Canadian wheat, oats and barley acres are down from last year.
