The rally in prairie farmers’ main crop markets continued in the week before Victoria Day, pushing Winnipeg canola futures to as high as $10.80 per bushel and Minneapolis wheat to $7.25 US per bu.
Grain and oilseed prices for old and new crop years were supported by several factors, including the generally upbeat mood in world equity markets, the May 12 U.S. Department of Agriculture and other reports that reduced their forecast for year end stocks and weather problems affecting North American seeding and South American production.
But many analysts said the production situation and the USDA supply and demand report contain several bearish forecasts like a record U.S. soybean crop and growing world wheat stocks, which minimize the upside potential unless a major event that affects supply or demand occurs.
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“Demand is still the key to the near term price movement, but acreage (and the potential for acreage) will keep a lid on prices,” according to a market commentary by Darrell Holaday of Advanced Market Concepts in Manhattan, Kansas.
“The reality of larger world wheat supplies and the prospect for increased soybean acreage has prompted selling. In addition, much of the good news was built into the market prior to the (USDA) report.”
USDA revised its U.S. soybean stocks for the end of the current crop year to 130 million bu. from 160 million in its last report, but also projected the new soybean crop will be the biggest on record and the corn crop the third largest.
Huge world wheat stocks are holding down prices for lower grades of wheat, but Minneapolis spring wheat, which acts as a basis for most western Canadian wheat, has risen sharply in recent weeks as wet, cold conditions cripple seeding in North Dakota, western Minnesota and parts of the Canadian Prairies.
July and December Minneapolis spring wheat futures rose by more than $1 per bu. since mid-April.
But the general all-class wheat outlook is poor beyond North America. Holaday said the new crop year still shows a glutted world wheat situation.
“The world numbers were very negative, with world ending stocks projected to go over 180 million tonnes,” said Holaday.
“If this becomes reality, it will be very difficult to export wheat out of the U.S.”
This puts a lid on winter wheat prices, analysts said.
The USDA report helped support corn prices, which are the benchmark for other feedgrains such as barley.
Winnipeg canola futures have rallied for weeks, with old crop July and new crop November contracts rising to almost $10.80 per bu. from slightly more than $9 per bu. in early March.
Oilseed prices are supported by strong exports of Canadian canola and U.S. soybeans, especially to China, smaller than expected seeded canola acreage and a bullish world oilseed situation.
Oil World, an influential oilseed analysis publication, forecasted May 12 that global new crop canola production would fall to 55 million tonnes in 2009-10 from 58.28 million.
If world demand grows to 57.7 million tonnes, as Oil World expects, then stocks should be drawn down to only five million tonnes from the expected 7.7 million at the end of 2008-09.
Ukraine, which exported almost three million tonnes this crop year, will likely produce only enough to export half that amount in the new crop year.
“We expect a sharp decline in rapeseed exports from Ukraine,” said Oil World.
The positive mood in world markets hinges on the sense that the world’s economic problems may be lessening or at least getting no worse.
That would make agricultural commodities among the likely winners and the best chance of better asset prices this year, according to Philippe Chalmin of commodity yearbook CyclOpe.
“Whatever happens I think we can anticipate for farm products a rebound in prices that may be the first to take place,” Chalmin told Reuters News Agency.
“It looks today like there is a wind of optimism in the markets, people think recovery is there and if it materializes, the first markets that will benefit will be commodities.”
The rally in prairie farmers’ main crop markets continued in the week before Victoria Day, pushing Winnipeg canola futures to as high as $10.80 per bushel and Minneapolis wheat to $7.25 US per bu.
Grain and oilseed prices for old and new crop years were supported by several factors, including the generally upbeat mood in world equity markets, the May 12 U.S. Department of Agriculture and other reports that reduced their forecast for year end stocks and weather problems affecting North American seeding and South American production.
But many analysts said the production situation and the USDA supply and demand report contain several bearish forecasts like a record U.S. soybean crop and growing world wheat stocks, which minimize the upside potential unless a major event that affects supply or demand occurs.
“Demand is still the key to the near term price movement, but acreage (and the potential for acreage) will keep a lid on prices,” according to a market commentary by Darrell Holaday of Advanced Market Concepts in Manhattan, Kansas.
“The reality of larger world wheat supplies and the prospect for increased soybean acreage has prompted selling. In addition, much of the good news was built into the market prior to the (USDA) report.”
USDA revised its U.S. soybean stocks for the end of the current crop year to 130 million bu. from 160 million in its last report, but also projected the new soybean crop will be the biggest on record and the corn crop the third largest.
Huge world wheat stocks are holding down prices for lower grades of wheat, but Minneapolis spring wheat, which acts as a basis for most western Canadian wheat, has risen sharply in recent weeks as wet, cold conditions cripple seeding in North Dakota, western Minnesota and parts of the Canadian Prairies.
July and December Minneapolis spring wheat futures rose by more than $1 per bu. since mid-April.
But the general all-class wheat outlook is poor beyond North America. Holaday said the new crop year still shows a glutted world wheat situation.
“The world numbers were very negative, with world ending stocks projected to go over 180 million tonnes,” said Holaday.
“If this becomes reality, it will be very difficult to export wheat out of the U.S.”
This puts a lid on winter wheat prices, analysts said.
The USDA report helped support corn prices, which are the benchmark for other feedgrains such as barley.
Winnipeg canola futures have rallied for weeks, with old crop July and new crop November contracts rising to almost $10.80 per bu. from slightly more than $9 per bu. in early March.
Oilseed prices are supported by strong exports of Canadian canola and U.S. soybeans, especially to China, smaller than expected seeded canola acreage and a bullish world oilseed situation.
Oil World, an influential oilseed analysis publication, forecasted May 12 that global new crop canola production would fall to 55 million tonnes in 2009-10 from 58.28 million.
If world demand grows to 57.7 million tonnes, as Oil World expects, then stocks should be drawn down to only five million tonnes from the expected 7.7 million at the end of 2008-09.
Ukraine, which exported almost three million tonnes this crop year, will likely produce only enough to export half that amount in the new crop year.
“We expect a sharp decline in rapeseed exports from Ukraine,” said Oil World.
The positive mood in world markets hinges on the sense that the world’s economic problems may be lessening or at least getting no worse.
