OVERNIGHT GRAIN TRADE

ICE canola futures were managing modest $1 to $3/tonne gains up to an hour ago this morning, but have now turned $1/tonne lower, following weaker soyoil.

CBOT soybeans are trading 4 to 6 cents/bu higher this morning, led by the nearby contracts. Bean futures fell 10 cents on Monday after hitting two-month highs on Friday, as industry players lost confidence that Chinese buyers would purchase US soybeans, while dealers assessed exemptions granted to US crude oil refiners for use of soy-based biofuels.

The US Environmental Protection Agency on Friday approved most backlogs of requests by small oil refineries for exemptions to compulsory biofuel use, raising concerns over reduced demand for renewable fuels often produced from soy.

Chicago corn futures are fractionally to a penny weaker. Corn firmed on Monday after a crop tour forecast the US harvest below estimates from the USDA.

US wheat markets are mixed this morning…Minnie spring wheat futures are down 1 to 3 cents, HRW is fractionally to a penny lower, but SRW wheat futures are gaining 1 to 2 cents.

In its weekly national crop condition ratings, USDA on Monday said 71% of US corn is good to excellent, unchanged. 69% of US soybeans are in good to excellent shape as of Sunday, up one point from the week before.

Noted crop consultant Michael Cordonnier left his US national average corn yield unchanged at 184.0 bu/acre with a neutral bias going forward. Cordonnier also left his US soybean yield unchanged this week, at 53.0 bu/acre with a neutral bias going forward.

98% of US winter wheat is harvested, in-line with the average. 49% of US spring wheat is called good to excellent, 1% lower, (33% fair and 18% poor to very poor condition) and 53% is harvested, just behind normal.

In Other News

– Saskatchewan finalizes trade mission to Asia… The dates are set for Saskatchewan Premier Scott Moe’s trade mission…runs September 6 to 12th. It’s a very important region for the province. In 2024, Saskatchewan exported over $10 billion to Asia…$4.4 billion to China, $929 million to Japan and $162 million to South Korea. The goal is to reinforce future trade opportunities and engage with China on their temporary duties on peas and canola.

The Premier has invited Prime Minister Mark Carney and any other federal ministers to join the trade mission. “Saskatchewan has expressed urgency to the federal government and been clear that we need to see action now to support the over 200,000 people across Canada’s canola industry,” Moe said. “That’s why we are leading through this mission, reinforcing future trade opportunities, and engaging with China on these temporary duties before it’s too late.”

Moe’s visit will mark the first time a Canadian premier has conducted a trade mission to China in six years.

– Strong supply and harvest forecast push down Russian wheat export prices… Russian wheat export prices fell last week amid a seasonal peak in supply and optimistic harvest forecasts. The price for Russian wheat with 12.5% protein content for free-on-board (FOB) delivery in the second half of September was US $235/tonne at the end of last week, down $3.50 from the previous week, said the IKAR consultancy. “We are seeing a peak in seasonal supply in the northern hemisphere, while demand from importers is sluggish,” it said. The SovEcon consultancy estimated the price at $236-239/tonne, down $3 from the end of last week.

– Severe drought may hit Ukraine winter rapeseed sowing… The ongoing drought in central, southern and eastern regions of Ukraine may have a negative impact on winter rapeseed sowing, which has already begun, state weather forecasters said. Ukraine is a major European rapeseed grower and exporter with winter rapeseed accounting for the vast majority of the crop. “The lack of moisture accumulation in the soil will have the greatest impact on winter rapeseed, which is best sown between August 25 and September 10,” forecasters said in a report. Forecasters said that the most difficult conditions were in the southern, south-eastern and central regions where precipitation during the period from June 1 to August 20 amounted to only 30-60% of the norm.

Ukrainian agricultural analysts have said that sunflower fields have been the hardest hit by the drought, significantly reducing their estimates for this year’s harvest. Ukraine is a major global sunflower seed grower and sunflower oil exporter.

– Brazil judge grants injunction against soy moratorium suspension… A Brazilian federal judge granted an injunction on Monday temporarily suspending a decision from antitrust watchdog CADE that had ordered grain traders in the world’s largest soy exporter halt their so-called “soy moratorium” program. The two-decade-old private pact was created to protect the Amazon rainforest by barring soybean traders from buying from farmers who cleared land there after July 2008.

CADE’s general superintendent last week gave grain traders 10 days to suspend the soy moratorium or face fines, as the watchdog called for a full investigation into the signatories of the program in which companies share commercially sensitive information. The decision was criticized by grains trader lobbies, environmental group Greenpeace and Brazil’s Environmental Ministry, while welcomed by farm groups including Aprosoja Mato Grosso.

In Monday’s decision, judge Adverci Rates sided with Abiove, a lobby that represents oilseed crushers, ruling to suspend the watchdog’s decision until a full CADE panel makes its final call on Abiove’s appeal.

– Catching up on Carney’s Europe trip… Prime Minister Mark Carney has been traveling through Central and Eastern Europe since Saturday. It’s his fourth trip to Europe since becoming Prime Minister. The former governor of the Bank of England has a personal history with many of the leaders there and expanding Canada’s trade with Europe was a key part of his campaign pledge as a way to respond to US President Donald Trump’s tariff policy.

The trip started with a visit to Kyiv for Ukraine’s Independence Day. Carney said Canada has not ruled out the possibility of having Canadian troops on the ground in Ukraine if a ceasefire is reached in the country’s war with Russia. Canada’s military already operates in the region by providing training to Ukrainian soldiers.

Calls for a ceasefire have dominated Carney’s conversations in Ukraine and Poland, where he met separately Monday with Polish Prime Minister Donald Tusk and President Karol Nawrocki.

Today’s agenda includes a meeting with German Chancellor Friedrich Merz in Berlin, followed by a trip by helicopter to Kiel where Carney will tour a submarine manufacturing facility.

A final stop in Riga, Latvia, begins Tuesday evening when he will meet with Latvian Prime Minister Evika Silina. On Wednesday he will visit members of the Canadian Forces at the Adazi Military Base before returning to Ottawa.

This morning, Carney said his government has shortlisted a German and a South Korean company as the two final contenders to supply submarines to the Royal Canadian Navy. He also announced an agreement with Germany to co-operate on critical minerals, including co-funding new projects.

While the meetings are heavily focused on the war in Ukraine, it’s clear there’s an economic angle to the defence discussions. At a NATO summit in June, Carney promised that Canada would join members in a dramatic defence spending hike, to 3.5% of GDP by 2035, from a current target of 2%, as well as an additional 1.5% on defence-related spending such as infrastructure.

Outside Markets

The Dow Jones Industrial Average tumbled 349.27 points lower on Monday to settle at 45,282.47, while the S&P 500 dipped 27.59 points lower to 6,439.32. Early Tuesday, the September Dow Jones Futures are down another 42 points.

Global stock markets are weakening this morning after US President Donald Trump announced he is pushing to fire US Federal Reserve governor Lisa Cook, an unprecedented move that further undermines confidence in the Fed’s independence. Wall Street futures are down as the news muddied the outlook for Fed policy and stoked uncertainty over prospects for a US interest rate cut next month.

Canada’s TSX stock index futures followed sentiment lower…along with stock market declines overnight in Europe and Asia.

The September US Dollar Index is down 0.168 at 98.150. The Canadian dollar is steady against its US counterpart…currently quoted at 72.26 US cents.

October crude oil futures are $1.00 lower at $63.80/barrel. Oil prices eased after surging nearly 2% yesterday, with traders keeping a close eye on developments regarding the Ukraine war that could disrupt Russian fuel supplies.

Grain Markets

Chicago soybean futures are rebounding 4 to 6 cents/bu higher to start this morning as US-China talks are planned for this week…not negotiations, just lower level talks. Bean futures posted losses of 9 to 11 cents across most contracts on Monday. Soymeal futures are rising $1 to $2/ton this morning after finished mixed yesterday. Soyoil futures continue to weaken…down 50 to 57 points right now after finishing 18 to 53 points lower yesterday.

A Chinese trade official is heading to Washington this week for meetings with US trade reps according to a Wall Street Journal report. Soybean purchases are expected to be discussed…which has been a glaring issue for the soy trade as China has purchased nothing officially from the US as the new crop harvest looms…Beijing preferring to direct all its soy buying to South America.

The USDA says 69% of US soybeans are in good to excellent condition, up 1% from the previous week, with 89% at the pod setting stage and 4% dropping leaves, matching their five-year averages.

Chicago bean futures have rebound rallied surprisingly well in August despite a record Brazil crop, a large US crop pending and the US seeing an alarming low level of China sales on the books for fall shipping (none). The new marketing year for US soybeans, and corn, kicks off September 1st.

The market has become technically overbought in the short term due to the almost 70 cent rally over the past two weeks. Recent price action perhaps warrants rewarding the rally thus far with an incremental forward cash sale of 2025 soybean production for products that needs to move off the combine.

Chicago corn futures are trading fractionally to a penny lower this morning. On Monday, the corn market posted gains ranging from fractional to penny in the front months.

USDA’s weekly crop progress report showed a total of 44% of the US corn crop dented, with 7% pegged as mature, both in line with average. Condition ratings were steady at 71% good/excellent.

Export demand for US corn remains robust, providing underlying price support. Current US export inspections for shipment are up 28% year-over-year, with USDA expecting a 25% increase.

Pro Farmer’s annual US Midwest crop tour last week concluded a 2025 corn crop size below the current USDA guesstimate due to disease issues in key growing portions of the region. But both the USDA and Pro Farmer are forecasting a crop above 16 billion bu, which would drive 2025-26 US corn carryout sharply higher, even with strong demand expectations for most sectors.

The corn market must also still grapple with a record large second crop harvest wrapping up in Brazil.

US wheat markets are mixed this morning… Minnie spring wheat futures are slipping 1 to 3 cents lower, HRW down fractionally to a penny, but SRW wheat is up 1 to 2 cents. The US wheat complex also saw mixed action on Monday, with the KC market the weak link, SRW wheat 2 to 3 cents higher, while spring wheat closed Monday with 2 cent gains.

But wheat markets overall remain pressured by harvest activity that is advancing quickly and lower prices worldwide.

USDA projects the US winter wheat harvest at 98% complete. The US spring wheat crop was seen at 53% harvested, behind the 54% average…and crop condition called 49% good to excellent, down 1 point from the previous week. There are quality concerns in the northern US Plains and Canadian Prairies.

USDA wheat export shipments are running strong…a multi-year high 946,240 tonnes for the latest week ended Aug 21. That was more than double the previous week. US wheat marketing year exports have totaled 5.763 MMT, which is 10.99% above the same period last year.

Russia’s wheat crop estimate from IKAR was raised by 0.5 MMT to 86 MMT, with the exports raised by the same to 43 MMT.

There’s a lot of wheat available globally right now, and world prices remains generally weak.

CANADIAN GRAIN MARKET

ICE canola futures closed weaker for the first time in four sessions on Monday amid declines in Chicago soyoil over US biofuel demand questions. The US Environmental Protection Agency on Friday approved many of the requests by small oil refineries for exemptions to mandatory biofuel use. After pursing through the details, the trade now sees the ruling as reducing demand for biofuel overall, which can use soy and canola oil as a feedstock in production.

Malaysian palm oil futures were also lower yesterday, but European rapeseed was higher.

Friday’s Alberta crop report put the overall harvest in that province at just 2% complete as of last Tuesday, behind the five- and 10-year averages. Canola was reported to be less than 1% harvested.

Prairie harvest progress is expected to accelerate in the coming days, with little rain in the forecast for the next 10 days.

November canola fell $7.10 on Monday to close at $659.40/tonne, and January lost $6 to $671.50.

For today… canola futures were trading as much as $2 to $3/tonne higher just an hour ago, but have now turned $2 to $3/tonne lower this morning. Nov canola is down $2.90 at $656.50/tonne…flirting the previous two trading sessions with its 20-day moving average ($668), but failing. Underlying chart support resides at the 200-day average ($650). But net overall, the downward trendline drawn off the June high remains intact as we lean into harvest season.

Improved Prairie harvest weather is now emerging following recent widespread rain and storm action.

Soyoil extending its pullback this morning following a surge to end last week on conflicting SRE developments. European rapeseed and energy markets are weak as well. Suggests near-term upside potential in the canola could be limited to temporary corrective measures.

Malaysian palm oil continues to pull back from the contract highs posted a week ago on concerns over demand from India slowing if it gets too high priced compared to soyoil.

To access the latest futures prices, go to https://www.producer.com/markets-futures-prices/

“To be honest with you, I was starting to feel pretty optimistic about canola,” he said.

Related stories:

• China hits Canadian canola with anti-dumping probe
• China hits Canada with anti-dumping probe on canola imports in response to EV tariffs

The numbers indicated there would be extended periods of 2024-25 where the market would need to ration supplies, resulting in a run-up in prices.

A couple of days after that bullish thought entered his head, China’s Ministry of Commerce announced it was initiating an anti-dumping investigation into canola seed imports from Canada.

“As of Tuesday morning, all the pieces on the board got thrown on the floor,” said the MarketsFarm analyst.

“Now it feels like a different game.”

Nobody knows how long the investigation will take, but Jubinville is convinced it will result in punitive, trade-distorting tariffs.

The market responded by falling the limit of $45 per tonne Sept. 3.

However, analysts seem to think Canada should be able to weather the looming China storm, at least in the 2024-25 crop year.

People in the trade have told Jubinville that China already forward purchased 3.5 million tonnes of Canadian canola for this crop year.

He was thinking the country would take an additional 1.5 million tonnes before the end of 2024-25, but that additional volume and some of the pre-booked sales might now be in jeopardy.

Chuck Penner, analyst with LeftField Commodity Research, is keeping his fingers crossed that Chinese crushers will import as much Canadian canola as they can before implementation of duties.

“It’s possible that we see a boom in canola exports in the short-term,” he said.

“We could conceivably move a million tonnes or more in the first quarter to China.”

Penner noted that China’s anti-dumping investigation into Australia’s barley exports took 18 months, so it’s conceivable there could be no real impact for the entire 2024-25 crop year.

Even if China does not take delivery of all the canola it has forward purchased, it doesn’t necessarily spell disaster for the oilseed because the industry has become far less export dependent of late.

Penner is forecasting that Canada’s crushers will process 11 to 12 million tonnes of the 2024 crop, leaving about seven to eight million tonnes for export.

“We used to have to export over 10 million tonnes,” he said.

Other markets could pick up the slack caused by a reduced program to China.

Sales to traditional markets such as Japan and Mexico have been languishing well below normal the last few years due to stiff competition from Australian canola.

The Australian government is forecasting 5.5 million tonnes of production in 2024-25, which is in line with last year but a far cry from the 8.27 million tonnes produced two years ago.

So, it is possible that Japan and Mexico could return to buying more normal levels of Canadian canola this year, which would be a huge help.

Penner was already pencilling in higher sales to the European Union, which had a short crop this year. Ukraine won’t be as much help as it has been in the EU market due to a disappointing crop in that war-torn country.

The United Arab Emirates was a big buyer of Canadian canola during the last trade spat, and it could come to the rescue again.

Jubinville agrees that Canada’s canola sector might be OK even if duties are levied before the end of the crop year.

He thinks the market initially over-reacted to the China news, which it tends to do when any type of uncertainty is introduced.

He still sees Canadian canola carryout dropping at the end of 2024-25. While he is no longer “outright bullish” about the crop, there will be times during the year when canola will need to be priced to discourage exports.

However, there are other factors besides China’s announcement that will keep a lid on prices.

“We still have this giant South American/American soybean situation that sort of puts the thumb on the scale here,” said Jubinville.

Not everybody is as optimistic about the outcome as the analysts. Morningstar DBRS, an international credit rating agency, says Canada’s canola industry could suffer losses similar to those incurred during the last dispute with China.

Industry estimates pegged those losses at $1.54 to $2.35 billion per year, according to a Canadian Press story.

Saskatchewan agriculture minister David Marit and trade and export development minster Jeremy Harrison sent a letter to their federal counterparts stating that they warned Ottawa this could happen.

“We are disappointed that once again Saskatchewan will be negatively impacted by Chinese retaliation,” the ministers said in their letter.

Chris Davison, president of the Canola Council of Canada, said the current anti-dumping case is different than the previous phytosanitary-based trade dispute with China.

The current one potentially involves the entire industry, while the previous spat only ensnared Richardson International and Viterra.

The last dispute ran from March 6, 2019, to May 18, 2022, when China lifted its export restrictions against the two grain companies.

Total export volumes were essentially halved during that three-year stretch.

Davison said the council intends to fully participate in China’s investigation.

“We are confident that an investigation into Canada’s canola trade with China will demonstrate alignment with and reinforce our support for rules-based trade,” he said.

In the meantime, the council will be busy promoting the crop in traditional markets and in some potential new ones.

“We will continue to put effort into all markets of significance and opportunity,” he said.

The council remains focused on exports despite the meteoric rise in domestic crush capacity.

“Let’s be really clear, exports are critically important to the success of our industry, and they will continue to be so,” he said.

Davison stressed that any market development efforts will be aimed at complementing rather than replacing the Chinese market.

“China remains an absolutely critically important and valued market for us,” he said.

MarketsFarm analyst Mike Jubinville wonders where the Asian giant will get the canola it needs to fuel its vast crush sector.

Related stories:

• Analyst confident canola can weather anti-dumping storm
• China hits Canada with anti-dumping probe on canola imports in response to EV tariffs

Australia is the world’s second largest exporter of the commodity behind Canada.

However, the Chinese market has been effectively closed to Australian canola since China started enforcing a zero-tolerance policy for blackleg disease in late 2020.

That issue could conceivably be resolved with “a stroke of a pen,” he said.

However, there is another phytosanitary issue that is equally problematic for Australia.

Canada can clean canola shipments to China’s stringent specifications, which call for no more than one percent foreign material.

“The Australians to date have not been able to (do that),” said Jubinville.

Australia has only exported 500 tonnes of canola to China since the start of 2024, Ole Houe, director of advisory services at IKON Commodities in Sydney, told Reuters.

If Australia can’t ship canola to China, it will continue to supply the European Union, Mexico and Japan, which raises the question about where Canada’s canola will end up.

Jubinville said it would be better if Australia’s canola goes to China, leaving a void in those other markets that can be backfilled by Canada.

“I’m hoping all we’re looking at is a shuffling of the matrix,” he said.

LeftField Commodity Research analyst Chuck Penner shares Jubinville’s bewilderment about why China keeps targeting a commodity it desperately needs.

“Canola has become a bit of a favourite whipping boy for China,” he said.

“I’m always a little surprised that they’re willing to cut off their nose to spite their face because there are limited other options for canola.”

China’s Commerce Ministry said Canada’s canola exports to China soared 170 per cent in 2023, amounting to US$3.47 billion. Canada accounted for 94 per cent of the country’s canola imports that year.

“Affected by the unfair competition of the Canadian side, China’s domestic rapeseed-related industries continued to suffer losses,” the ministry said in a statement.

Penner scoffs at the notion that China’s investigation is based on the year-to-year increase in exports.

He said exports jumped so much because Richardson International and Viterra were banned from exporting to China for almost half of 2022.

“The fact that volumes change is no evidence at all of subsidies or dumping.”

The analysts and the Canola Council of Canada firmly believe China is simply retaliating because of the new tariffs imposed by Canada on imports of Chinese electric vehicles, steel and aluminum.

China expressed outrage that Canada followed the lead of the United States and the European Union by imposing those tariffs.

“China strongly deplores and firmly opposes the discriminatory, unilateral, restrictive measures taken by Canada against imports from China despite the opposition and dissuasion of many parties,” the ministry said in a statement.

Jubinville believes China is sending a message to the U.S. and the EU by retaliating against Canadian canola.

“This comes down to the old Chinese proverb of kill the chicken, scare the monkey,” he said.

“Hurt the little guy to show the big guys what you’re capable of.”

However, in the process China may be hurting its own businesses.

“China needs the canola, so this can be somewhat problematic for them as well,” said Jubinville.

Ukraine is the world’s other major canola exporter. APK-Inform reports that this year’s production was 3.32 million tonnes as of Aug. 8, with 97 per cent of the acres harvested. That compares to a 4.7 million tonne crop last year.

Penner said that is not good news for the EU, which also had a short crop. Ukraine is one of the main suppliers of canola to the EU.

The European Commission is forecasting 18 million tonnes of EU rapeseed/canola production this year, a 9.5 per cent drop from the previous year.

Russia is poised to harvest a record five million tonnes of the oilseed, a 19 per cent increase over last year. The country recently replaced its export ban that expired Aug. 31, 2024, with a 30 per cent export duty that expires Aug. 31, 2026.

Contact sean.pratt@producer.com

November canola futures hit a contract low of $585 per tonne on Aug. 6, while domestic wheat bids fell to their lowest levels in years as the U.S. futures traded near their softest levels since 2020.

Lack of any significant weather threats across the Midwest will likely keep the bias pointed lower in U.S. soybean, corn and wheat futures until something changes the narrative, according to Sean Lusk of Walsh Trading in Chicago.

Soybeans in the U.S. were rated 68 per cent good to excellent as of Aug. 5 by the U.S. Department of Agriculture, which compares with only 54 per cent at the same time the previous year.

Corn was in similar shape at 67 per cent good to excellent, marking a 10-point improvement on the year.

“There’s no story here to drive (futures) significantly higher … we need a story,” said Lusk, adding “if we turn hot and dry for the rest of the month, that would bend this thing back up, but there’s nobody calling for that.”

Even if it does turn dry, at this point in the growing season soybeans are setting pods and corn is past the pollination stage.

Eventually speculators will look to take profits and cover their short positions, but Lusk noted that every previous attempt at correcting higher was met with renewed selling and he expected a sustained rally was unlikely in the absence of fresh weather concerns.

While Western Canada also started the growing season on a relatively favourable footing, conditions have deteriorated, especially in parts of Alberta and Saskatchewan. The provincial crop report from Saskatchewan for the week ended Aug. 5 pointed to a decline in yield potential for many commodities.

“At one point we were looking at a record crop, but it’s probably closer to average now,” said Lawrence Klusa, president of Seges Markets in Winnipeg, pointing to lack of rain in many regions over the past month.

However, he added that expectations for large U.S. soybean supplies, slow U.S. export sales, and weakness in crude oil were all weighing on the oilseed markets.

“There’s a recognition that canola will not be the crop it was, at least not what people thought it would be even a few weeks ago,” said MarketsFarm analyst Mike Jubinville.

However, “if canola has a problem, it’s a soybean problem, not a canola problem,” said Jubinville adding “as long as the soybeans are sluggish, it will be difficult to maintain a rally in canola.”

He said the 2023/24 canola crop was possibly understated by as much as 500,000 tonnes by Statistics Canada.

While the bearish influence of the soybean market weighs on canola, the price weakness should make Canadian exports look more competitive to international buyers. Problems with the rapeseed crop in Europe could also be supportive, according to Klusa.

Wheat crops in Europe were hurt by excessive moisture, and the two Canadian analysts expect the wheat market could show signs of leveling off. Although, “for right now, there seems to be sufficient (wheat) supply relative to demand,” according to Jubinville.

“The upside potential is not great in the major crops, (but) there might be more hope in some of the special crops,” said Klusa pointing to pulses and durum as markets with possible room for strength because Canada is a major player in the world markets for those commodities.

While durum should maintain a premium over spring wheat, he cautioned that prices were unlikely to see the same strength as they did a year ago.

“I’m willing to go as far as to say I’m no longer bearish on these agricultural markets,” the MarketsFarm analyst said during the company’s The Long and Short on Markets: Spring 2024 Edition webinar.

Related stories:

• Australian canola a ‘thorn in our side’
• Anti-dumping case may affect pea flow

“But I think it’s premature for us to say we’re outright bullish.”

Markets don’t tend to pop back up after a prolonged downturn. Instead, he anticipates more of a sideways trading range for a crop like canola, with some decent pricing opportunities along the way.

He is “reasonably optimistic” farmers might see some $15 per bu. pricing over the course of the spring.

One of the reasons for his optimism is that until recently, managed money funds had the largest net short position in the history of canola futures.

“That in itself kind of opens the door for at least some corrective bounce potential and in the last month we’ve certainly seen some of that,” said Jubinville.

The one big bearish factor for canola is that the trade feels Canadian growers harvested 19 million tonnes of the crop last year, which is well above Statistics Canada’s forecast of 18.3 million tonnes.

MarketsFarm is forecasting 1.8 million tonnes of ending stocks in 2023-24, but that number could jump to a more burdensome 2.4 million tonnes if the trade is right.

Canola exports have been pathetic. He is forecasting 6.9 million tonnes for the year compared to 10.9 million tonnes of domestic crush.

China is buying, but Canadian canola has been priced out of other markets such as Japan, Mexico, Pakistan and the United Arab Emirates.

The good news is that canola has become more competitive recently with crops such as U.S. soybeans.

The premium over soybeans is about $35 per tonne, down from the astronomical level of $450 per tonne a couple of years ago.

“We have come a long way to correcting that, to the point now where I think we are very competitively priced,” said Jubinville.

A seasonal analysis shows that April to June tends to be the time of the year with the best canola prices.

“Hopefully we can see a $15 opportunity as our next potential broadside target,” he said.

Feed barley prices have finally started trading at a slight discount to imported U.S. corn after being at a significant premium during the summer months.

Jubinville thinks the barley market is still in the process of establishing how big that discount should be.

Barley is inextricably tied to corn now that feed users have become proficient at importing the commodity following the 2021 drought.

He is forecasting three million tonnes of corn imports in 2023-24. That is down from more than five million tonnes a couple of years ago but much higher than what it used to be before that.

Jubinville is forecasting two million tonnes of barley exports and 1.65 million tonnes of ending stocks, which would be the highest level in six years. A lot of that barley is in the feed surplus areas of northern Saskatchewan.

India breathed life into the pea market when it lifted import restrictions on the crop through the end of April.

That will raise exports to 2.5 million tonnes and shrink ending stocks to 156,000 tonnes. It would have been more than double that if India hadn’t opened.

India’s sudden policy change briefly pushed prices up to $14 per bu. in Alberta and western Saskatchewan. They have since come down but are still in the $12.75 to $13.30 range.

The big lingering question in the pea market is whether India once again extends its open border or soon slams shut?

“My inclination is to move out old crop while the getting is still good, because I don’t know and you can’t predict Indian government policies,” he said.

New crop values are in the mid-$10 per bu. range in Saskatchewan and upper-$10 range in Alberta.

“If (India) extends the program we could have $12 peas for fall delivery, or if they don’t and they close the door, we’re $9 peas,” said Jubinville.

The green lentil market is tethered to India’s pigeon pea prices, which remain at elevated levels following two short crops.

As long as those pigeon pea prices stay elevated, lentil prices will not fall.

Old crop prices for large green lentils are in the 80 to 82 cents per pound range, but that’s because there is basically nothing left to ship.

New crop values are around 53 cents per lb. for fall delivery, up a nickel from last week but down from the earlier highs of 58 to 60 cents.

Jubinville expects Canadian lentil acres to rise and is forecasting 2.3 million tonnes of production, up from 1.7 million tonnes last year.

If that happens, new crop values will likely fall.

Cash bids for red lentils recently climbed back to 35 cents per lb. He expects the market to hover around that level for a while as India gets set to harvest its lentil crop.

Australia produced 1.3 million tonnes of red lentils in December-January, which is down from 1.6 million tonnes last year but still a very good crop despite an El Nino scare.

Fortunately, there has been strong demand for those lentils from India due to its short pigeon pea crop.

Contact sean.pratt@producer.com

MarketsFarm analyst Mike Jubinville has heard reports that China recently purchased up to one million tonnes of the crop from a couple of grain companies for delivery in the March through May period.

However, he doesn’t think the Asian giant’s spending spree will have much of a buoying effect on futures prices, which have been on a downward slide since summer.

“I don’t think they’re going to chase the market higher,” he said.

“I think they’ve given us a price and said, ‘take it or leave it,’ and we took it.”

Mercantile Consulting Venture is also reporting on China’s recent shopping trip.

“There has been some fresh export sales activity to China, albeit not a big shift,” the firm stated in its recent market report for SaskCanola.

It has heard that four to six cargoes have been sold to China in the last couple of weeks. Mercantile said the sale is for February or March delivery, which is slightly earlier than what Jubinville is reporting.

“This is a welcome development, but we need to (do) much more of it to make a material difference,” said Mercantile.

The new sales come on the heels of a record 739,000 tonnes of canola purchased by China in December 2023, the vast majority of which was provided by Canada.

That is up from the 477,000 tonnes it bought in November, with Canada supplying about 400,000 tonnes of that.

Both of those totals were huge improvements from October, when no Canadian canola moved to China.

Canada’s total canola export program is still significantly lagging last year’s pace despite the improving sales to its biggest market.

Exporters shipped out 2.72 million tonnes of the crop through week 25 of the 2023-24 crop year, according to the Canadian Grain Commission.

That compares to 4.11 million tonnes of bulk shipments the same time last year.

“Are we going to be able to make even six million tonnes of exports this year?” Jubinville wondered.

“At this pace, I’d say no.”

That would be a bitter disappointment. Agriculture Canada is counting on 7.7 million tonnes of exports for the year.

Jubinville said China isn’t the problem. It’s Canada’s other main buyers.

“Where’s Mexico? Where’s Japan? Pakistan is not buying. The UAE (United Arab Emirates) toll crushes our canola and sends it to Europe. They’re not around,” he said.

Part of the problem is stiff competition from Australia, which has harvested four big crops in a row.

Their canola usually flows to the European Union, but it is likely being rerouted to markets in Asia due to the problems with the Suez Canal, said Jubinville.

Mercantile believes one of the reasons Canada’s sales have been so lacklustre is that Statistics Canada has overestimated the size of the 2023 crop.

Mercantile thinks farmers harvested 17.79 million tonnes of canola, which is below the official government estimate of 18.33 million tonnes.

Jubinville said the market seems to think the opposite is true, otherwise futures values wouldn’t be dropping so low.

However, he said increasing or decreasing Canada’s production by a few hundred thousand tonnes is immaterial because prices are being weighed down by the sluggish vegetable oil complex.

“These are global tidal events that are sloshing back and forth, and canola is just bobbing in that water,” he said.

Jubinville said the days of $1,000 per tonne canola futures are long gone. That was the result of a perfect storm of events, including the COVID-19 pandemic, the 2021 drought and soaring renewable diesel demand.

He thinks the market “overexaggerated crazily” to the upside during that time and now it is probably doing the same thing to the downside. Unfortunately, he doesn’t think the market has bottomed out yet.

It doesn’t help that Canada is likely going to end up with more than two million tonnes of carryout if exports don’t pick up in the second half of the campaign.

The good news is that domestic crushers purchased 5.16 million tonnes of the oilseed through week 25, which is slightly ahead of the same time last year.

They are on pace to buy a record 10.73 million tonnes of the crop, which is close to Agriculture Canada’s forecast of 10.82 million tonnes.

But that won’t be enough to compensate for the lack of sales to international customers.

“The export market is where we hear whistling by the graveyard,” said Jubinville.

MarketsFarm analyst Mike Jubinville is advising growers to wait until prices climb another $1 per bushel before making any more incremental sales.

“I suspect there’s room for an oversold canola market to have some element of bounce to it,” he told growers attending a fall outlook webinar.

Related stories:

• Ukraine expects big canola crop
• China snaps up Australian barley after tariffs lifted

MarketsFarm is forecasting 1.4 to 1.5 million tonnes of canola carryout at the end of 2023-24 despite having a bigger production number than Statistics Canada.

“That is still a fairly tight scenario here that we’re proposing,” said Jubinville.

It pegs production at 18 million tonnes. Domestic demand of 10.5 million tonnes will mop up a lot of that supply.

Exports are forecast at 7.5 million tonnes, with four million tonnes headed to China. However, he is a little nervous about that market.

“China so far this year has been oddly sluggish in terms of contracting Canadian canola supply,” he said.

That could be because Russia is suddenly sending 75,000 to 100,000 tonnes of rapeseed oil to China every month.

China is also importing canola seed from Australia and Ukraine.

One thing keeping a lid on the market is cheap European rapeseed prices caused by a tsunami of exports from Ukraine, which harvested 4.5 million tonnes of the crop in addition to big carryover supplies.

Jubinville thinks the new floor for Canadian prices is around $700 per tonne, which is about where prices were at on his Oct. 26 presentation.

Canadian canola is reasonably priced at a $35 to $40 per tonne premium over soybeans. The normal premium is in the $50 to $100 range.

He thinks prices may have bottomed out and should be heading higher over the next couple of months.

Statistics Canada estimates barley production at 7.8 million tonnes. The trade thinks it could be eight to 8.5 million tonnes.

Jubinville is forecasting two million tonnes of exports, much of which is already on the books.

Today’s barley prices, ranging from $6 to $7.20 per bushel depending on location, are not competitive in the export market.

They would need to be $5.35 backed off to mid-Saskatchewan to work in the Chinese market.

“We essentially are very much going to be a domestic market for barley if we’re going to maintain prices at present levels,” he said.

Jubinville is forecasting five million tonnes of domestic demand and 1.2 million tonnes of ending stocks, the highest level in six years.

Western Canada will likely import 2.5 million tonnes of U.S. corn in 2023-24. It is at price parity with barley right now.

He believes U.S. corn will start showing up in mid-November, and barley prices will be tethered to corn from that point on.

Statistics Canada pegged oat production at 2.4 million tonnes. The trade thinks it might be 250,000 tonnes larger than that, but it will still be one of the smallest crops in the past 40 years.

That is because last year’s 5.2 million tonne crop overwhelmed the market and acres fell hard.

Carryout from 2022-23 is estimated at 1.2 million tonnes, so there is still plenty of supply.

“It’s a journey of time,” said Jubinville.

He thinks supplies will tighten up in the second half of the 2023-24 campaign. That should put upward pressure on prices, which need to transition from feed to food prices to attract acres for next year.

Statistics Canada’s pea estimate is 2.3 million tonnes, which he thinks is about 300,000 tonnes too small.

Jubinville is forecasting 2.2 million tonnes of exports, with one million tonnes of that going to China.

Canada will be facing stiff competition from cheap Russian peas in China, although there may be some quality issues with those peas.

The good news is that U.S. soybean meal prices have shot up nearly 20 percent in October due to Argentina running out of soybeans.

That may be creating demand for yellow peas in China’s feed market.

Yellow pea bids are creeping up to $11 per bu. in Saskatchewan and $12 in Alberta.

Another bullish factor is that India’s chickpea crop is in doubt, although a 150,000-tonne pea import quota still exists in that market.

Jubinville said it is hard to figure out where pea prices are going, but he would “meter out” sales into the current appreciating market.

Statistics Canada estimates the lentil crop at 1.5 million tonnes, while the trade believes it is closer to 1.85 million tonnes.

He is forecasting 1.7 million tonnes of exports, down from 2.25 million tonnes last year.

Pigeon pea prices are sky high in India and hold a huge premium over red lentils in that market.

That is going to support Canadian lentil prices, especially green lentils.

The “fly in the ointment” is Australia, which is set to harvest another big crop in December. It is forecast at 1.25 million tonnes, down from last year’s record 1.6 million tonnes but still well above average.

Large green lentil prices are hovering in the 63 to 65 cents per pound range, while reds are in the 35 to 37 cent range.

“This market right now feels kind of grindy,” said Jubinville.

His advice to growers is the same as it is with peas — meter sales into what has been a slowly rising market.

Contact sean.pratt@producer.com