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CWB PRO’s Lower
The Wheat Board’s first estimations of returns for the 2009 crop suggest
wheat prices will be 50 cents/bu under the current 08 PRO. Durum drops
by $1.50/bu. Malt barley drops 55 cents.
The price for 1 CWRS 13.5 is $289/t, in-store Vancouver. With freight/elevation
of $1.60 that’s $6.81/bu at the elevator in Saskatchewan. Durum is
$7.13/bu on 1 CWAD 14.5%.
CWB PRO’s – CWB Feb 23 and 26, 2009
Wheat 2008 2009 Durum 2008 2009
!CWRS 14.5 7.19 6.63 1CWAD 14.5 8.53 7.13
1CWRS 13.5 6.70 6.28 1CWAD 13.0 8.23 6.83
1CWRS 12.5 6.42 6.08 2CWAD 13.0 7.87 6.58
2CWRS 13.5 6.42 6.11 3CWAD 13.0 7.47 6.09
2CWRS 11.5 5.91 5.70 4CWAD 6.62 5.47
3CWRS 13.0 6.01 5.65 Barley
3CWRS 5.58 5.04 Feed barley 2.19 2.14
4CWRS 5.25 4.82 Malt barley
1CWHWS 13.5 6.70 6.28 2-row slct 5.50 4.39
1CPSR 5.36 5.21 6-row slct 5.06 3.95
1CPSW 5.36 5.21
1CWRWSlct 11.5 5.63 5.59
1CWRW 5.09 5.02
1CWES 5.89 5.46
1CWSWS Slt<9.9 5.28 5.30
Note: Prices at the elevator in Saskatchewan
The 2008 PRO’s were updated on Feb 26 with few changes. The 2009 PRO’s
were released at Grain World last week.
CWB Fixed Price Contracts Available
Fixed Price Contracts on hard wheat have a basis of negative 47 cents
under the PRO, yielding $5.80/bu. at the elevator in Saskatchewan.
Farmers can contract at this level. You get the initial on delivery,
then payment in full within two weeks. You are no longer in the pool
on wheat you sell on FPC’s. There is no final payment.
FPC’s change daily as they are based on Minneapolis Dec wheat futures
plus a CWB adjustment.
Durum basis levels are negative 97 cents. This basis is calculated
internally at the Board since durum futures are not traded.
1 CWRS 13.5
PRO, Vancouver $7.87/bu
Freight/elevation $1.60
At the elevator in Saskatchewan $6.27
Fixed Price Contract basis (Monday) -47 cents
Fixed Price Contract $5.80
1CWAD 13
PRO, Vancouver $8.25
Freight/elevation $1.40
PRO, at the elevator $6.85
Fixed Price Contract basis (Monday) -97 cents
Fixed Price Contract $5.88
There are, as yet, no Fixed Price Contracts for malt barley.
USDA First Crop Estimates
USDA estimates that American soybean plantings will increase by 1.5
mln acres in 2009. This would be a record crop size and would produce
a record crop, if things work out. However the good news is that soybean
plantings could have been even higher. Some private estimates were
for an increase by 3 mln acres since . This projection is based on
estimates by USDA, not on farmer surveys.
USDA projects corn plantings to be flat and wheat to drop by 5.1 mln
acres. Winter wheat was down by 3 mln acres so a large decrease in
spring wheat plantings is assumed.
USDA's first survey-based estimate will be their Prospective Plantings
report to be released on March 31.
Futures Lower
Grain futures have reverted to following the stock market and American
stocks hit ten- year lows this week, below chart resistance. There
is little fundamental news.
Canola and soybeans are lower. Demand for canola is strong with good
export business but strong elevator demand is being reflected in basis
levels that hit plus $16/t in Alberta and even money in Saskatchewan.
Futures are not seeing anywhere near the same strength. They’re lower.
It’s as if the trade doesn’t feel like fighting the bearish futures
markets pressures brought on by factors having nothing to do with
canola.
Chinese soybean orders are being cancelled as domestic meal demand
softens due to severe deaths from bird flu. Vegoil demand remains
strong, as it is one of the cheapest sources of calories.
A lower Canadian dollar is positive for canola prices.
[Contents]
Barley Market Grinds Lower - Jerry Klassen
Feedlots in the Lethbridge area have their nearby demand covered and
are showing bids in the range of $152 to $155 delivered to the feedlot.
Farmer selling has been steady throughout the winter keeping pressure
on the cash trade. We have been advising to be 60% sold on barley
and are watching for additional sales opportunities in late spring
and summer.
Barley acres in Canada have potential to be down 7% to 10%. Using
a 10 year average yield of 54 bushels per acre, production would be
9.075 million mt. This would be the smallest crop in the last 15 years
excluding the drought of 2002. The market will function to ration
demand in the 2009/10 crop year as the carryout would dip down to
historical lows of 1.5 million mt. The domestic market will continue
to trade at a large premium to world values limiting the export barley
program. When stocks become this tight, domestic feed values have
potential to trade a premium to malt.
We are looking for strength in the barley market later in the crop
year. There is potential to experience a very similar price pattern
as last year with the barley market making seasonal highs in the late
June or early July. Old crop prices will be pulled higher on potential
tightness of new crop.
South America is expected to receive timely rains this week. US corn
export sales have slowed because the focus is turning to South America.
The corn market is functioning to encourage demand and may spill over
into barley in the short term. However, we feel the barley market
will divorce itself from corn and other feedgrains as the market focuses
on new crop fundamentals.
Canola Trends Lower
Two weeks ago, we advised selling 20% of new crop canola production.
Since then, prices have dropped $30 per mt.
Four factors are weighing on the canola market:
Export demand has slowed from China and other major destinations.
Year to date exports are 4.04 million mt, up from 3.185 million mt
last year but we need to see additional business to meet our export
target of 6.5 million mt. Chinese buying usually slows in mid April
as their new crop comes off in May. Using our export projection, the
Canadian canola 2008/09 carryout is still poised to come in at a record
3.1 million mt.
Canola acres are expected to be up 3% in 2009. Returns per acre are
still more favorable for canola in comparison to other major crops.
Without going into detail, the 2009/10 carryout may also reach over
3.0 million mt should average yields materialize.
The soybean complex has been trending lower. Recent rains and the
upcoming forecast look favorable for South American soybean development.
US soybean acres have potential to be up 2% to 4% in 2009. A lack
of Chinese buying interest for US soybeans sets a negative tone.
Weaker energy and equity markets are weighing on canola. Biodiesel
demand may be down from earlier expectations given the contracting
economy.
Sell Flax - John Duvenaud
Cash bids for flaxseed in western Canada continue to strengthen. Pioneer
at Mollard is bidding $11.70/bu after winter levels between $10 -
$12. Elevators will resume shipping to Thunder Bay in second half
March. The St. Lawrence Seaway will reopen for navigation on March
31, marking the resumption of Canadian flaxseed trade with Europe.
European demand is unlikely to be robust with the EU economy in even
worse shape than that of North America. European banking has its own
problems and trade credit is hard to source. In addition, building
construction is slumping so demand for industrial products made from
flax is soft.
The health food market, one would think, would be immune to the economic
slowdown. Wrong. Human edible users are still in business but shipments
are flat to lower.
Flax is backing up on farms. Total Canadian supplies after the 2008
harvest were up 31,000 tonnes from the year before. Stocks as of Dec
31 were 78,000 tonnes higher, with most on farms.
Sell the 4th 20% increment of your 2008 flax bringing sales to 80%.
Movement should be good for the next month as European business opens.
Don’t start new crop pricing yet. The first bids are around $11.20/bu,
not especially attractive. Wait for $11.50.
Lentils Firm
It’s a testament to the strength of the lentil market that it is operating
well, while most global, and prairie, commodity markets struggle.
Lentils remain an easy crop to sell with No. 2 Lairds trading at 30/cents/lb
fob farm and reds at 40 cents.
Global demand remains strong with the caveat that currency fluctuations
are a major concern. The American dollar remains the safe haven and
is soaring to record highs, to the detriment of every other currency.
The Indian rupee in particular has dropped hard in the last weeks
making Indian traders shy about committing to imports priced in US
dollars. It’s getting hard for exporters to make even routine sales.
However, the international pipeline is empty and people continue to
eat.
The big picture is turning positive for all pulses, as major production
areas are dry, specifically India, Syria and Turkey. Dryness is especially
serious in India where their main crop is currently growing. India
has two crops a year but the winter (Rabi) crop gets the bulk of the
moisture. Cumulative rain, to date in the Rabi season, is down 43%
from normal.
In Canada, lentils are becoming hard to find in the country. Reds,
Estons and Richleas are getting cleaned up. Pakistan and India are
traditionally not Eston buyers but they’ve taken some in the last
month, splitting them and using them as food. Turkey remains a large
buyer of reds. They’re used domestically or re-exported to their traditional
Iranian and Iraqi markets. Most remaining Saskatchewan trade is with
No. 2 Lairds.
Wild Oats is 80% sold on 2008 lentils. These current markets are at
or near the year’s highs.
New crop bid indications are showing up at levels well under spot
prices.
[Contents]
Futures & Options Markets
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