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ICE Futures Canada canola futures traded within a relatively narrow window during the week ended Feb. 19, but managed to close near the top end of that range by Friday. Spreading accounted for the bulk of the volumes, with short covering off of recent lows behind much of the strength. Barley futures moved lower, although volumes were light once again. Competition from feed wheat, durum, and U. S. dried distillers grains (DDGs) in the cash market likely put some pressure on the futures as well, as end-users seem to have their pick of feed ingredients for the time being.
In the U. S., soybeans moved higher during the week, while corn turned lower. Both commodities were also range bound overall, with movements in the currency and energy markets resulting in some choppy trading days. While it could be argued for both soybeans and corn that the lows were in for the time being, the looming South American crops remained a fairly significant bearish price influence.
U. S. wheat futures posted gains during the week, although a turn higher in the U. S. dollar index limited the upside. U. S. wheat continues to be overpriced in the international markets, and the strong currency only exaggerated that fact.
While the U. S. dollar was up during the week, the Canadian currency was even stronger, gaining ground on its U. S. counterpart once again. While the strong Canadian dollar hampered the upside in canola, end-user demand remains steady. Exports continue to move at a pace only slightly behind the year-ago level, while the domestic crush was starting to pick up during the week as well.
U. S. CORN SEEN RISING
February can be a rather slow month in the agricultural markets, and not just because everyone who can is off enjoying Canadian malt barley on some far-off beach. Winter’s not quite over, but spring can still feel quite far away – unless you’re in Vancouver. Spring will still be here sooner, rather than later, which means it will soon be time to put another crop in the ground and see what the summer brings.
The U. S. Department of Agriculture held its annual outlook forum during the week, and put out some estimates on the 2010 U. S. crop. USDA analysts predict a three per cent increase in U. S. corn acres, to 89 million, while soybean acres are expected to be down 0.6 per cent, to 77 million. Production of the crops was estimated at 13.16 billion bushels for corn, which would be relatively unchanged on the year, and 3.26 billion for soybeans, a three per cent decline. U. S. wheat acres were being called down nine per cent on the year, with production down 12 per cent, to 1.945 billion bushels.
A lot of the area that would normally have been seeded to winter wheat in the northern U. S. wasn’t seeded this past fall due to the late harvest, which means growers will be putting corn on that land instead. The price outlook on corn is said to be looking reasonably good, especially with lower fertilizer costs this year.
In Canada, the jury is still out on what looks good to plant this year, as prices for most crops have come down over the winter months. With that being the case, rotational issues can be expected to take precedence in the choice of the lesser of two evils.
While I have yet to hear any excitement over any new-crop pricing opportunities, the general refrain seems to be that canola is looking “OK,” especially as it’s a crop that also benefits from cheaper fertilizer and can be relatively easy to grow. Canada’s most recent government projections are a little dated, coming out at the end of January, but early calls from Agriculture and Agri-Food Canada are for reductions in durum, barley and flax acres, steady canola plantings and increased acres in oats, peas and lentils.
Actual seeding conditions in spring will no doubt lead to all kinds of adjustments to actual seedings, as will the market conditions over the next month, seed availability and any number of other factors. The area will no doubt be seeded with something and discussion will once again turn to whether there’s too much or too little of this or that commodity.
Personally, I live in the city and will be planting tomatoes in my backyard garden – not because the tomato market was so good this past year, or because last year’s crop turned out so well. The tomatoes turned out horrible. I’ll be planting tomatoes because I always plant tomatoes and if the weather co-operates they taste delicious fresh from the garden. I might throw in some peppers and onions so I can make salsa, or maybe even some sweet peas to diversify my backyard rotation.
It could be stretching the point, but I think there is an analogy to be made between my garden and the larger seeding intentions debate that usually takes place at this time of year. What will provide the most benefit, be that in flavourful produce or returns per acre? Is there a new variety that may work out better in my garden/field conditions? Will anyone actually want to eat the radishes/buy the durum? And what about the cost of compost/fertilizer? These are all important questions to ask, and the answers will vary depending on the responder.
In any case, I think it’s safe to say this could prove to be a pretty good year for rhubarb, although the buyers seem to have backed away for now.
– Phil Franz-Warkentin and Dwayne Klassen write for Resource News International (RNI), a Winnipeg company
specializing in grain and commodity market reporting.