“It’s all on raindrops right now,” said Scott Capinegro of Barrington Commodity Brokers.

Recent forecasts for rain have pressured corn and soybean markets, though declining crop conditions could provide support moving forward.

Since last week, soybeans lost 21 cents per bushel in the August contract, while corn lost three in the September contract (all figures US$).

“There is definitely damage done to the crops, corn and beans. The market action though, is very iffy,” Capinegro said.

He thinks both markets will go higher “but we may have to wait until we start harvesting.”

Values could also rise as crop tours scout fields, reporting crop ratings and yields.

“You’re definitely going to want to hear from them that there are problems,” Capinegro said.

However, recent data from the U.S. Department of Agriculture has indicated supplies of both commodities are ample, which is keeping a lid on the market.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“In some ways you could say it’s a classic weather market,” said Jon Driedger, senior market analyst at FarmLink Marketing.

Prices had gained following dryness in Western Canada.

And while recent showers have pressured prices, they aren’t enough to completely ease traders’ concern about the upcoming crop, which is likely to keep some support in the market.

“Some areas got really good rain, some areas got a trace, and other places got missed more-or-less altogether,” he said.

Rain in the Prairies has been a near-term bearish factor, but Driedger said the dryness had already taken its toll in some areas.

“I think in terms of a bin-busting yield, I think that’s off the table.”

The canola market is especially sensitive to those potential losses, he said, as supplies were tight going into the growing season.

While the supply fundamentals remain somewhat supportive, Driedger said weather is likely to rule how the market moves, which could add an element of unpredictability into trade.

“We’re in a critical window with this canola, and so the next couple weeks with the weather and the forecast, is really going to be important.”

Since last week, November canola advanced about $3 per tonne, ending at $514 on Wednesday.

Other factors traders will be watching include movement in the Canadian dollar and key technical areas.

The loonie gained more than a cent against its U.S. counterpart on Wednesday, after the Bank of Canada announced it would be raising interest rates. If that strength continues it could be bearish for canola.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Demand on the ingredient side of the flax market has been steady, said Mike Popowich of processing firm TA Foods at Yorkton, Sask.

“But we’ve experienced a bit of a slowdown on the exports. There are ongoing issues with processed flax in China,” and the Flax Council of Canada and government officials are working to resolve the issue, he said.

China in July last year began rejecting flax shipments due to a lack of import standards, the council said in a release.

The restriction still applies to food-grade flax, to date.

China has never had a specification for processed flax for human consumption, “but they started to make something about it over the last year, which has kind of hindered our exports there on cleaned or milled flax,” Popowich said.

That has created a volume build up in the North American market, though the market has held mostly steady, despite the stockpiles.

“Prices are fairly stable, they’ve pretty much flat-lined, since harvest, the supply is still out there right now,” Popowich said.

As for up-and-coming crops, most look generally OK, though market watchers are paying attention to areas of concern in southern and southwestern Saskatchewan.

“That’s led to some speculation, and some farmers holding onto their flax,” Popowich said.

Delivered elevator flax prices in Western Canada are sitting between about $11 and $12 per bushel, according to data from Prairie Ag Hotwire.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“The acreage numbers are important, but this game right now is all about weather,” said Mike Jubinville of ProFarmer Canada, naming spring wheat as one crop the market had been closely watching.

While estimates for all wheat seeded by Canadian farmers in 2017 are down 3.7 per cent from 2016 to 22.4 million acres, the area seeded to spring wheat is expected to rise 2.5 per cent to 15.8 million acres, Statistics Canada said in its principal field crop areas survey, conducted between May 26 and June 12.

Despite the anticipated increase in spring wheat area, U.S. futures rallied in early activity on Thursday.

“Yield is what makes or breaks crops,” Jubinville said, adding that traders have been focusing on dryness in the Dakotas and Montana, which extended up into areas of Western Canada, namely key growing areas in Saskatchewan.

More recent forecasts show those dry areas expanding into parts of eastern Alberta throughout July.

“So the worry of the marketplace is starting to extend,” Jubinville said.

Crops are especially vulnerable to heat stress this year due to the late start to seeding in Western Canada, meaning a larger portion of the crop is going to be in its reproductive phase and vulnerable to hotter, drier weather.

The canola number came in higher than previously reported by the government agency, reaching record levels, yet canola futures also rallied in early activity on Thursday.

Variability and concerns about crop conditions in Western Canada were factors in the support, while a tightening supply situation limited losses for now.

Canadian farmers reported seeding a record-high 22.8 million acres of canola in 2017, up 12.1 per cent from the 20.4 million acres reported in 2016, Statistics Canada said.

The market needs a 19.5 million-tonne crop to satisfy demand components amid the tightening old-crop situation that’s materializing, Jubinville said.

“I think it [canola acres] could be viewed as kind of neutral — it could be viewed as slightly negative longer-term,” said Jerry Klassen, manager of the Canadian office of Swiss-based grain trader GAP SA Grains and Produits.

Nationally, the total area seeded to barley fell 9.7 per cent from 2016 to 5.8 million acres in 2017, Statistics Canada said.

The barley number can be viewed as slightly bullish, as the figure came in below analyst expectations, Klassen said.

“I think that this shows that farmers stuck with their original plan with the barley,” he said.

Acreage seeded to oats rose 13.6 per cent from 2016, to 3.2 million acres in 2017, StatsCan data said.

While higher than year-ago levels, the oat number was at the low end of trade expectations.

“Some of that had to do with seeding delay issues and acres that just couldn’t get planted in what was a pretty wet area,” Jubinville said.

He named northeastern Saskatchewan, a prominent oat-growing area, as one that may have spurred some of the lower seeded area.

Pulse crop area held mostly stable, with no “real new story.”

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.

Table: StatsCan principal field crop area survey against trade estimates, in millions of acres.

* – Total wheat = Spring wheat + durum wheat + winter wheat remaining after winterkill

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Investors in CBOT corn and soybean markets are rolling out of positions in the July contract into more deferred months.

“With that said, we’re seeing a lot of shorts shore-up positions,” Reilly said, ahead of data from the U.S. Department of Agriculture on Friday.

The government agency is set to release its acreage and grain stocks reports June 30.

Reilly expects USDA data to show implied feed usage was strong last quarter, which could be supportive for corn.

For soybeans, stocks are expected to be heavy, he said.

“Given that there’s probably more soybeans out there then what’s down on paper at the moment.”

If the reports are neutral for soybeans and corn, those markets are likely to inch higher in the aftermath, as weather models indicate a drier and warmer outlook in the U.S. for mid-July.

A generally weaker U.S. dollar is also expected to act as a supportive feature in commodity markets in the near term, Reilly said.

Since last week, corn prices lost 12 cents per bushel in the July contract, which closed at $3.5675, while the September contract declined close to 10 cents per bushel, ending at $3.6625 on Wednesday (all figures US$).

Soybeans fell about five cents per bushel in the July contract on the week, ending at $9.14, while the August contract lost 3-1/2 cents, closing at $9.19 on Wednesday.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Cattle futures at the Chicago Mercantile Exchange (CME) saw some turbulence over the past week, though prices for cattle at auctions in Manitoba were able to resist that pressure.

“The cash market didn’t seem to reflect it,” said Allan Munroe of Killarney Auction Mart.

Rain improved ranchers’ optimism about the cattle feeding situation this summer, which was supportive for the market, he said.

“Guys were concerned about the pastures, they were dry. They were very concerned about what was going to happen,” he said.

“But we’ve had a lot of rain, pastures got that drink they needed, so there’s a little bit of optimism and local guys interested.”

Most areas across Manitoba received beneficial rains on the week, supporting crop conditions.

Prices also drew out some sales that would have otherwise been held over until September, Munroe said.

Those stronger cash prices also lent themselves to increased volumes, as did earlier concern about pasture conditions.

“Our last couple of sales were probably double what we would expect in the end of May and mid-June,” he said.

The Killarney market had 370 head at its sale on June 12, the last sale until the fall run in September.

Though cash prices in Manitoba were divergent from movement in the futures, many ranchers are still keeping an eye on fluctuation in that market.

CME cattle futures often move into a weather-based market into the summer, taking on a level of volatility, Munroe said.

“Everyone guesses how the corn and stuff in the States is going to be,” he said. “It can change quickly based on what happens, or the forecast in Iowa.”

In terms of the prices Canadians are paying for beef, a new report from Dalhousie University says those prices are expected to edge up.

This year, meat prices are expected to increase between seven and nine per cent, the university’s semi-annual Food Price Report said.

Low inventories of cattle and hogs are expected to be partially responsible for the increase.

Through the summer, ranchers will be watching feed grain prices, trade movement and the Canadian dollar.

Currently, feed grain prices in Western Canada are slightly higher, as spring-threshed grain did not weigh on inventories as much as previously thought.

Trade groups are also watching the anticipated renegotiation of the North American Free Trade Agreement (NAFTA).

The Canadian dollar recovered from its earlier lows in the week ending June 16, which has the potential to curb demand from the U.S.

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U.S. President Donald Trump said earlier in the year he was considering pulling the U.S. from the North American Free Trade Agreement (NAFTA), but later shifted his position to say he will renegotiate the trade deal.

The U.S. dairy lobby released a 15-page document indicating its demands as those talks are expected to move forward. The National Milk Producers Federation and the U.S. Dairy Export Council groups are asking for freer trade in dairy and a reversal of a Canadian industry policy on pricing milk-derived products.

Wally Smith, president of Dairy Farmers of Canada, said his group is more concerned with being able to produce goods for the domestic market than the export market in the U.S.

“We’re not interested in the export market,” Smith said via phone from Washington, D.C. on Friday.

“Our interest is serving the domestic market and continuing to serve the domestic market.”

The industry is looking to the Canadian government for continued support, he added. Multiple government officials have affirmed their support for the supply management system.

There is no clear timeline on when renegotiations of the trade deal could start, though talks are expected to start this summer.

“It’s difficult to know just exactly at this time when it might be,” Smith said.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Positioning into a report from the U.S. Department of Agriculture was also a feature, though the data was less of a market mover than weather-based influences.

Ahead of the weekend, traders were looking for rain, and concerned about too-dry areas in Western Canada, which buoyed ICE Futures Canada canola’s July contract by close to $15 per tonne in the week ending June 9.

Rains were critically needed in areas of Western Canada, and though parts of Manitoba, Saskatchewan and Alberta saw showers over the weekend, more moisture is needed in some areas, while others have become too wet.

Variability and uncertainty throughout the growing season are likely to keep a weather-related premium in the market in the near term.

The majority of Canada’s canola has been seeded, with projections around 95 per cent, and some traders expect the crops that aren’t in the ground will be shifted to other commodities.

USDA released its world agricultural supply-and-demand estimates (WASDE) report on June 9. While the effects of that report were tepid, and likely to have a short-lived effect, the data provided a sense of clarity to the market about what the upcoming supply situation will look like.

Most directly applicable to canola, USDA projected world soybean ending stocks for 2016-17 at 93.2 million tonnes — well above what market watchers had expected.

However, global carry-out for 2017-18 was mostly steady.

The effects of that report were quickly shrugged off, as concern about production in the U.S. Midwest supported values.

The oilseed market had been underpinned by forecasts for record-high heat. During the weekend, areas of the U.S. also saw hail, which could damage crops, and further kept the market supported, causing spillover to canola.

Dry crops in the northern Plains are expected to see beneficial rains this week, which will provide some reprieve to thirsty crops, and pressure values.

However, some market watchers say that may not be enough to replenish soil moisture.

On the grain side of the market, world carry-out of corn stocks are expected to reach 224.6 million tonnes for the current marketing year, USDA said — higher than previous estimates, but within what analysts had expected.

In 2017-18 that number is expected to tighten to 194.3 million tonnes.

The corn market was also supported by weather-related concerns, with ideas that key growing areas are too dry.

World wheat production in 2017-18 is estimated at 739.53 million tonnes, down by about 15 million tonnes from the prior year, but up from earlier estimates.

Carry-out is expected to be up at 261.2 million tonnes from 2016-17’s 256.4 million tonnes.

Wheat markets have struggled with a bearish supply-and-demand situation, and the USDA data indicated little reprieve from those fundamentals.

But the weather-attentive market has focused on concerning weather issues — namely, spring wheat production in northern U.S. growing areas, which are hot.

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The animal rights and vegan advocacy group responsible for capturing the video says that’s not enough, and is pursuing legal action.

Employees at a Vancouver-area chicken farm were caught in hidden camera footage filmed by a volunteer for Toronto-based Mercy for Animals. The footage was broadcast on CTV News on Monday and posted on YouTube Tuesday.

The video, featured prominently on Mercy for Animals’ website, shows workers throwing birds against crates, slamming them on the ground, slapping and stomping on birds and using them to simulate sexual acts. At one point, an employee attempts to rip a live bird in half.

The video shows some of the abuse happening in front of one of the organization’s supervisors.

Five employees, including one supervisor, have since been laid off.

“We are sickened with the footage and want to ensure all our suppliers and producers that this is not reflective of who we are, our fundamental beliefs or behaviour we accept from our employees. We do not condone or tolerate animal abuse,” Dwayne Dueck, president at Elite Farm Services, said in a statement.

Elite is the poultry services company that staffed the chicken catchers in question.

Krista Hiddema, managing director at Mercy for Animals, called the statement and action from Elite Farm Services “disingenuous.”

“Elite Services supervisors were involved in the abuse, and were supervising the abuse,” she said.

Mercy for Animals has since filed legal complaints with the RCMP, the Canadian Food Inspection Agency (CFIA) and the British Columbia Society for the Prevention of Cruelty to Animals (BC SPCA), Hiddema said.

Elite Farm Services said it is also in the process of establishing an advisory committee to review animal care guidelines and to create clear policies and procedures in line with industry standards and practices.

Poultry processor Sofina Foods, for whom the company catches birds, said late Monday it’s “appalled and extremely shocked by the video footage we saw of a few of our supplier’s employees displaying disturbing and unacceptable behaviours that (Sofina) does not in any way tolerate or condone.”

Sofina said Monday it had already asked that the employees involved be “dismissed immediately,” and that other staff be “requalified on the importance of animal care and fully understand the consequences of not following protocols.”

Mercy for Animals also alleged some of the abused chickens at the operation in question can be traced to Loblaws-owned grocery locations.

Loblaws released its own statement regarding the abuse allegations, noting it’s “investigating” the activities.

“We have zero tolerance for any animal abuse and have made it very clear to the supplier that this behaviour has absolutely no place in our food supply chain,” the company said.

Loblaws said it stands behind standards set by the National Farm Animal Care Council, the policies outlined by the Chicken Farmers of Canada, and its own commitment to animal welfare.

Chicken Farmers of Canada, in a separate statement late Monday, said there is “no defense for the mistreatment of birds.”

CFC noted its animal care program is “mandatory, third-party audited, and enforced on every farm,” and if a farm is found not complying with program standards, or is “causing undue suffering” to birds, the farmer is “subject to penalties and the proper authorities will be contacted.”

It can be problematic to use industry groups to regulate how animals are treated, Hiddema said. “This is like the fox guarding the hen house.”

The industry “is incapable of governing themselves,” she said, pointing to Mercy for Animals’ multiple undercover exposes in Canada.

The group has an online petition, calling for Loblaws to adopt meaningful animal welfare policies for its supply chains.

“We know that Canadians are compassionate people; they do not want animals tortured, and we’re asking for Canadians to use their buying power to speak up. And it is only through consumers that we’ll change what will happen in Canada,” Hiddema said.

CFC reiterated Monday that “this kind of animal abuse is not and will not be tolerated. It is not representative of how the industry works as a whole.”

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Includes files from AGCanada.com Network staff.

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Corn futures have downside potential, gathering influence from wheat futures and crop ratings in the near term.

“I’m looking for an improvement in crop ratings next week, which might put a little light pressure on corn,” said Terry Reilly of Futures International.

The market had a support level at $3.7125, he added (all figures US$). Prices broke below that level on Wednesday.

Spreading between wheat and corn markets has also kept CBOT corn from rallying over the past several sessions, Reilly said.

Beneficial rains in parts of the eastern Corn Belt could add further pressure.

Despite the bearish factors, corn could stay in a choppy two-sided range in the near term, until crop conditions stabilize.

Areas of dryness in the western Corn Belt could also keep some support in the market.

Since last week, corn prices have dropped close to eight cents per bushel in the July contract, closing at $3.77 on Wednesday.

Soybeans are expected to trade in a wide range over the near term, Reilly said. He pegged that range between $9.15 and $9.50 a bushel.

“I think the bean conditions came in below expectations,” Reilly said. “But for now, we’re looking for an improvement, because there’s a lot of good rains coming along.”

Overall, he added, the soybean crop is in good shape, and is mostly planted.

Since last week, soybean prices gained one cent per bushel in the July contract, closing at $9.3175.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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