MARKET OUTLOOK – WHEAT
Cash markets in Saskatchewan were touching crop marketing year highs this past week for spring wheat. Stronger basis and some support from futures have helped bring the markets higher. Strong export demand has elevators working to keep the product in their system. The USDA WASDE tacked on more production to global wheat balance sheets but keep in mind the usage levels were raised as well. The overall balance sheet looks heavier than it did just a few months ago but much of the increases were somewhat anticipated by the market heading into the USDA’s report. The market wasanticipating at least slight bumps to Argentinian, Australian, Canadian, and Russian levels prior to the report's release. The ending stocks data is well illustrated in the charts below. Canadian and U.S. demand is very strong, and FOB values are gaining ground. As always, demand needs to be watched closely as there are larger crops to be moving but if export pace remains on track, it could keep ending stocks from becoming burdensome in Canada. Markets have a good understanding of the global supplies, and we will finish off theAustralian and Argentinian harvests in the coming weeks. We will be looking ahead to winter crop progress as we head into the coming months.
MARKET OUTLOOK – DURUM
Demand is the big item to watch on durum. Export pace from Canada is slightly behind last year's pace. Italian buyers are cautious due to proposed pasta tariffs of 92 per cent into theUnited States, although these are expected to be postponed for the time being. They were initially threatened to take place in January. Markets will need to see import demand from Italy and North Africa as we head into winter season to keep bids stable. Saskatchewan durum bids are on average $8 CDN per tonne off the harvest lows set late September and are showing a flatline pace for the time being. There is anticipated to be ample supplies in the marketplace for the time being to meet current export demand. Quality is less than last year with 38 per cent of the durum in the #3 category and 15 per cent in #4 and #5 CWAD combined. Tunisia tendered for durum for the first time since the beginning of the year in January and came in at $323 to $326 per tonne for 100,000 tonnes.
MARKET OUTLOOK – WHEAT
Markets have recently bumped higher thanks to renewed Chinese demand in U.S. wheat. Trade rumours throughout the beginning of the week first sparked the markets interest and held steady once the word of the two cargos were secured. Argentinian and Australian harvest is underway, and the crops appear to be getting bigger vs smaller. Some reports that Argentina’s 22 mmt crop could be on the light side of production. Quality appears good with some light frost damage in regions but will likely not affect the overall crop. Australia’s crop in the Western region tacked on 1 mmt of tonnage in a recent report. Demand for North American wheat is holding up well as Canadian and U.S. crop exports ahead of last years levels even a few months now into the new crop marketing campaign. Demand is the big figure to be watching going forwards, although it appears to be pricing itself well as global wheat bids are stable to higher. Producer bids for spring wheat in the Canadian prairies have been increasing and basis on the Canadian prairies is doing the heavy lifting (see chart below) and we are still on hold for making big sales for now but are beginning to show interest in some small moves as cashflow and logistics dictate. As we head into winter, another item to watch will be any drought or issues with either the European, Black Sea or U.S winter wheat crops.
MARKET OUTLOOK – DURUM
Global durum markets will begin to look at how the European and North African crops begin to shape up as we enter winter season. Export pace continues to be strong but will need to continue its trajectory. EU import pace is up 28 per cent year-over-year but below the five-year average. Early demand has been promising and the notable 310,000 tonne sale to Algeria in October helped boost export sentiment. Provincial reports point to the crop being larger than Statistics Canada with Saskatchewan provincial crop report pointing to a 39 bpa average for durum vs a 34 bpa average just one year ago. Market prices are flat recently, up off the harvest lows and touching $8.00 in some further eastern prairie regions. Production is expected widely within the market to surpass Statistics Canada’s 6.5 mmt crop. Quality of the crop is a bit of an issue vs last year as there is more durum in the #3 and lower categories. #1 durum carrying a premium in the domestic market. Global import demand expected to drop from 9.2 mmt last year to 8.6 mmt this year, larger global production being penciled in at 37.2 mmt vs last years 36.4 mmt of which Canada will account for 6.5 mmt of that. EU crop at 8.3 mmt vs 7.2 mmt last year. Ending stocks, this year are expected globally at 7.5 mmt vs 6.7 mmt last year and Canadian durum will need to be competitive.
MARKET OUTLOOK – WHEAT
Markets leaving the contract lows a little further in the rearview mirror for Chicago and Kansas City wheat. Minneapolis wheat struggling to keep pace relative to Chicago and Kansas City. Overall, wheat markets continue to be fed new rhetoric towards larger crops. Argentinian and Australian harvest is underway, and the crops appear to be getting bigger vs smaller. Argentina’s initial crop harvest reports are that yields are better than anticipated. Australia’s crop in the Western region tacked on 1 mmt of tonnage anticipated and will keep the bulls somewhat limited as there is a bigger crop to chew through. Demand for North American wheat holding up well as Canadian and U.S. crop exports are ahead of last year's pace. Demand is the big figure to be watching going forward. Market will be looking to see if we can ramp up Russian/Black Sea shipments as there is a sizeable crop to move out of that region as well. Global wheat bids are stable to higher. We are transitioning into winter exporting season for northern hemisphere producers. Producer bids for spring wheat in the Canadian prairies have been increasing and basis on the Canadian prairies is doing the heavy lifting (see chart below). We are still on hold for making big sales for now but are beginning to show interest as we see cash bids continue to improve. As we head into winter another item to watch will be any drought or issues with either the European, Black Sea or U.S. winter wheat crops.
MARKET OUTLOOK – DURUM
Early demand has been promising and the notable 310,000 tonne sale to Algeria in October will only improve export prospects for the short term. Provincial reports point to the crop being larger than Statistics Canada with the Sask. provincial crop report pointing to a 39 BPA average for durum vs a 34 BPA average just one year ago. Market prices have picked up since harvest lows and are touching $8.00 in somefurther eastern prairie regions. Production is expected widely within the market to surpass Statistics Canada’s 6.5 mmt crop. Quality of the crop is a bit of an issue vs last year as there is more durum in the #3 and lower categories. #1 durum is carrying a premium in the domestic market. Global import demand is expected to drop from 9.2 mmt last year to 8.6 mmt this year, larger global production being penciled in at 37.2 mmt vs last year's 36.4 mmt of which Canada will account for 6.5 mmt of that. EU crop at 8.3 mmt vs 7.2 mmt last year. Ending stocks, this year are expected globally at 7.5 mmt vs 6.7 mmt last year and Canadian durum will need to be competitive. Early exports of Canadian durum have been keeping a good pace and pricing well into EU and NorthAfrica.
MARKET OUTLOOK – WHEAT
Wheat markets picking up ground this week and leaving the contract lows a little further in the rearview mirror for Chicago and Kansas City wheat. Minneapolis wheat has its lows a littlecloser as new ones were set last week. Minneapolis wheat in Monday’s trade action at the close is also the weakest of the contracts, with Chicago and Kansas City up double digits while Minneapolis wheat is struggling to hold onto its gains for the session. Overall, wheat markets continue to be fed new rhetoric towards larger crops. Argentinian and Australian harvest is underway, and the coming weeks will determine the crop size. The market well understands that these two nations have big crops coming and the market will look forconfirmation of these figures. Demand is the big figure to be watching. U.S. and Canadian demand appear very strong for early in the shipping season and Canadian wheat is being exported at a very rapid pace with what looks to be good export outlook for the near future as well. The market will be looking to see if we can expedite Russian/Black Sea shipments as there is a sizeable crop to move out of that region. Global wheat bids are relatively stable, some fewdollar moves in FOB values each week but relative stability. We are transitioning into winter exporting season for northern hemisphere producers. Producer bids for spring wheat in the Canadian prairies still have been increasing and basis on the Canadian prairies is doing the heavy lifting. We are still on hold for making big sales for now but are beginning to show interest if we see cash bids continue to improve. As we head into winter another item to watch will be any drought or issues with either the European, Black Sea or U.S. winter wheat crops.
MARKET OUTLOOK – DURUM
Early demand has been promising and the notable 310,000 tonne sale to Algeria will only improve export prospects for the short term. Provincial reports point to the crop being larger than Statistics Canada with Saskatchewan provincial crop report pointing to a 41 bpa average for durum vs a 33 bpa average just one year ago. Market prices have stabilized recently domestically following harvest lows. Production is expected widely within the market to surpass Statistics Canada’s 6.5 mmt crop. Crop prices domestically have stabilized and are seeing crop prices in the $7.75+ per bushel range across Saskatchewan and have picked up around $0.25 per bushel over the past month. Global import demand is expected to drop from 9.2 mmt last year to 8.6 mmt this year, larger global production being penciled in at 37.2 mmt vs last year’s 36.4 mmt of which Canada will account for 6.5 mmt of that. EU crop is at 8.3 mmt vs 7.2 mmt last year. Ending stocks, this year are expected globally at 7.5 mmt vs 6.7 mmt last year and Canadian durum will need to be competitive. Early exports of Canadian durum have been strong and pricing wellinto EU and North Africa.
MARKET OUTLOOK – WHEAT
Wheat futures markets still hover near their five-year lows and futures on the front month Minneapolis contract sit at $5.49 per bushel. The last time wheat futures were at this level was December of 2020. Kansas City and Chicago wheat finding a bit more ground recently, although contract lows remain very close in the rearview mirror. Wheat markets continue to be fed new rhetoric towards larger crops and the recent upgrades to Argentinian wheat production levels and anticipation that the Australian crop could grow vs shrink in size has wheat markets resistant to make a move higher. The market will need to make its moves higher on demand related stories. North American demand Is perceived as just fine with both U.S. demand forecasted to be strong and Canadian export pace being rapid. European and Black Sea shipping pace is behind pace, and we will need to see true demandpick up out of the region. There are a few key importers behind pace on imports, and we need to see these importers step up to the plate to keep demand moving forwards. Global wheat bids are relatively stable, some few-dollar moves in FOB values each week but relative stability. We will move out of harvest pressure in northern hemisphere and transition into winter exporting season. Producer bids for spring wheat in the Canadian prairies sit just below $7 and we are still on hold for making big sales as we hover and trod along our five-yearlows. Strong demand for CWRS is anticipated throughout the winter, we will be watching if U.S. trade deals or MOUs with nations such as Bangladesh on wheat pull from Canadian demand. As we head into winter another item to watch will beany drought or issues with either the European, Black Sea or U.S. winter wheat crops.
MARKET OUTLOOK – DURUM
The Canadian durum crop has grown through harvest as later estimates point towards a larger crop. Early demand has been promising and the notable 310,000 tonne sale to Algeria will only improve export prospects for the short term. Provincial reports point to the crop being larger than Statistics Canada with Saskatchewan provincial crop report pointing to a 41BPA average for durum vs a 33 BPA average just one year ago. Market prices have stabilized recently domestically following harvest lows. Production is expected widely within the market to surpass Statistics Canada’s 6.5 mmt crop. Crop prices domestically have stabilized and are seeing crop prices in the $7.50 to $7.75+ per bushel range across Saskatchewan andhave picked up around $0.25 per bushel over the past month. Global import demand expected to drop from 9.2 mmt last year to 8.6 mmt this year, larger global production being penciled in at 37.2 mmt vs last year’s 36.4 mmt of which Canada will account for 6.5 mmt of that. EU crop at 8.3 mmt vs 7.2 mmt last year. Ending stocks, this year are expected globally at 7.5 mmt vs 6.7 mmt last year and Canadian durum will need to be competitive. Early exports of Canadian durum have been strong and pricing well into EU and North Africa.
Market Outlook - Wheat
Market Outlook - Durum
Oct. 6
Market Outlook – Wheat
Wheat futures markets remain at levels not seen in around five years. New contract lows were made once again for both European and North American futures. Wheat markets have been digesting the larger crop sentiment for about a month now and there is a good understanding that the Australian and Argentinian crops will be of good quality. We have seen a stabilizing and even a slight increase in some cases in global wheat bids from export locations and there is the rolling idea that although many key regions are behind on exports, we know that import demand is forecasted to come to the market by many key agencies. Algeria’s large-scale purchase of 600,000 tonnes and some other more business being completed at these levels has importers beginning to see the value of the crop available to them. This reinforces that the market is of the notion that although global crop sizes have increased, global demand is still there. We remain hesitant to make major sales at the current time amidst harvest pressure and typical seasonality of markets.
Market Outlook – Durum
Canadian crop size has been increasing as producers get into harvest with Statistics Canada estimating the crop at 6.5 mmt up from 6.1 mmt in the August estimate. The crop size is larger than last year's total volume. Global import demand is expected to drop from 9.2 mmt last year to 8.6 mmt this year, larger global production being penciled in at 37.2 mmt vs last year's 36.4 mmt of which Canada will account for 6.5 mmt of that. EU crop is at 8.3 mmt vs 7.2 mmt last year. Ending stocks this year are expected globally at 7.5 mmt vs 6.7 mmt last year and Canadian durum will need to be competitive. Early exports of Canadian durum have been strong and pricing well into EU and North Africa. We are watching this trend closely and keeping an eye on export shipments in a proactive manner to analyse the movements.
Market Outlook – Wheat
Wheat futures markets to levels not seen in around five years. Wheat markets have been digesting the larger crop sentiment for about a month now and there is a good understanding that the Australian and Argentinian crops will be of good quality. We have seen a stabilizing and even a slight increase in global wheat bids from export locations and there is the rolling idea that although many key regions are behind on exports, we know that import demand isforecasted to come to the market by many key agencies. The market is of the notion that although global crop sizes have increased, global demand is still there. We remain hesitant to make major sales at the current time amidst harvest pressure and typical seasonality of markets.
Market Outlook – Durum
Canadian crop size has been increasing as producers get into harvest, with Statistics Canada estimating the crop at 6.5 mmt up from 6.1 mmt in their August estimate. The crop size is larger than last years’ total volume. Global import demand is expected to drop from 9.2mmt last year to 8.6mmt this year, with larger global production being penciled in at 37.2mmt vs last year’s 36.4mmt of which Canada will account for 6.5mmt of that. The EU crop is estimated at 8.3 mmt vs 7.2 mmt last year. Global ending stocks this year are expected to be at 7.5mmt vs 6.7 mmt last year and Canadian durum will need to be competitive. Quality of durum unharvested in thefields of the Canadian prairies could become a market factor if we begin to see degrading factors from the durum crop that was yet to come off before the rain event.
Market Outlook – Wheat
Wheat markets continue to grind near their contract lows on the futures markets and sit at levels which were previously seen in early 2021. Markets have a better understanding of wheat supplies now that the European, Black Sea, United States and Canadian crops are either off or close to wrappingup their harvest season. Recent USDA, Statistics Canada, ABARES and private reports confirm that global supplies have grown from earlier season reports. Australiancrops look favourable and have seen some major improvements in the past two months. The Argentinian crop looks great and that story will play out in the coming months as well. There is a lack of any major concerns for the market to work with right now and it has kept any movement sideways to lower. Demand is the item being watched as export pace is slow in some regions and reports of buyers remaining on the sidelines seeing how low prices may move before making any major commitments. With supplies relatively well understood, we will need to see stories build on the demand side. The next thing the market will watch as we move throughout the calendar will be EU and Black Sea winter crop planting. Nothing major to report there yet.
Market Outlook – Durum
Canadian producers will need to see strong export demand throughout the marketing year. Canadian durum is expected to be of good quality for export but will need to remain competitive globally. European production is estimated at 8.3 mmt vs last years’ 7.2 mmt which has weighed on EU prices. Global durum carryout is expected to jump to 7 mmt,up by 400,000 tonnes over last years’ ending stock estimate. Canadian durum crop size estimated by the International Grains Council (IGC) is at 5.8 mmt. However, Statistics Canada’s latest release has the figure closer to 6.1 mmt.Canadian durum values are under harvest pressure as supplies become available to the market.
Market Outlook - What to Watch with Wheat
Canadian producers will need to see strong export demand throughout the marketing year. Canadian durum is expected to be of good quality for export but will need to remain competitive globally. European production is estimated at 8.3mmt vs last years 7.2mmt has weighted on EU prices. Global durum carryout is expected to jump to 7mmt, up by 400,000 tonnes over last year's ending stock estimate. The Canadian durum crop size is estimated by the IGC at 5.8mmt but Statistics Canada’s latest release has the figure closer to 6.1mmt. Canadian durum values are under harvest pressure as supplies become available to the market. Statistics Canada stocks report released tomorrow, September 9th, will be closely watched by market participants globally.
Market Outlook – Durum
Canadian producers will need to see strong export demand throughout the marketing year. Canadian durum is expected to be of good quality for export but will need to remain competitive globally. European production is estimated at 8.3mmt vs last years 7.2mmt has weighted on EU prices. Global durum carryout is expected to jump to 7mmt, up by 400,000 tonnes over last year's ending stock estimate. The Canadian durum crop size is estimated by the IGC at 5.8mmt but Statistics Canada’s latest release has the figure closer to 6.1mmt. Canadian durum values are under harvest pressure as supplies become available to the market. Statistics Canada stocks report released tomorrow, September 9th, will be closely watched by market participants globally.
Market Outlook – What to Watch with Wheat
Markets have a much better understanding of total global supplies in major regions vs just one month ago. Canadian and U.S. wheat harvest will be off shortly, EU and Russian crop sizes well understood as well. After the North American crop is off there will be a few key southern hemisphere players. Australian crop prospects have improved significantly since spring although their major harvest is still a few months away. The Argentinian crop is looking excellent as well. The market will look for demand stories to give traders confidence that the market is finding a home for the crop that is being made available. We have seen west coast North American FOB bids stay relatively steady recently while European / Black Sea quotes pull back slightly as they try to generate demand for their freshly harvested crop.
Market Outlook - Durum
Export demand is anticipated to be lower from Canada due to the better European crop and lack of major production issues in the North African crop. Crop size from Statistics Canada is placed at 6.08 mmt. The crop has seen domestic bids fall week over week. Larger European Union crop availability will keep a lid on market appreciation and Canadian durum values will need to be competitive to gain sales throughout the crop marketing season.
Market Outlook - What to Watch with Wheat
North American Spring Wheat harvest
Market Outlook – Durum
Prairie crop size and quality will be very closely watched and will influence market direction. Export demand is anticipated to be lower from Canada due to the better European crop and lack of major production issues in the North African crop. Sask Ag is reporting an increase in durum crop conditions for Saskatchewan in what was to be their last crop conditions report prior to harvest. Quality and yield will be the market drivers in durum as the Canadian harvest is next up on the docket. At this point in the crop season, we would like to see crop quality and quantity before making next sales on the new crop. Early harvest of durum is just underway, but more will be known within the next 10 days.
Aug 18
Aug 11
Global wheat values have been trading mostly lower in recent weeks due to harvest pressure and lack of any bullish market stories that could essentially change the markets overall sentiment on the current situation. All eyes are on the Western Canadian crop for Durum. The crop size and quality will be very closely watched and will influence market direction. Export demand is anticipated to be lower from Canada due to the better European crop and lack of major production issues in the North African crop. Sask Ag reporting an increase in Durum crop conditions for Saskatchewan in what is expected to be their last crop conditions report prior to harvest. Quality and yield will be the market drivers in Durum as Canadian harvest is next up on the docket. Exceed is hesitant against making any additional new crop sales on wheat right now as market prices leave little to no profit on an average wheat crop. If Exceed sees some appreciation in new crop basis or futures, they will consider a sale.
According to Mercantile, futures markets remain under seasonal pressure. Global crops remain large, but Mercantile says slow harvest progress and limited farmer selling is driving a wedge between futures and cash prices. Given the various quality issues in Europe and the premium in cash markets over futures markets, Mercantile would hold sales for now.
According to Mercantile, the concerns about the protein content of French wheat in the wheat market remainin place, and Balkan wheat hit season highs due to strong demand by both EU and non-EU destinations. In Russia, Mercantile says values continued to rise within ongoing yield and quality concerns in the south, a slow harvest and strongfarmer retention. Mercantile continues to watch theweather/crop conditions, while there have been more quality concerns popping up. Old crop sales should be done, with around 25 per cent N/C sales on the books.
While wheat markets do not look exciting to Mercantile because the demand side remains tepid and hard to define for the coming crop year, they do note that there seems to be room for high protein wheat once again. In the ongoing crop year, demand for good quality protein wheat confirmed good demand for Canadian wheat. This year, we see German wheat come in with lower pro than normal, while once again seeing quality concerns with French wheat, and some concerns with Russian wheat. Mercantile says this will not fuel a change in overall price trends for wheat but should support a good premium for high quality/high pro wheat in the markets and support demand for Canadian product(all assuming we get off with good quality). Mercantile will be watching out for occasional premium selling opportunities.
Mercantile is watching the ongoing heat in Europe, where temperatures are expected to climb again mid-week. Protein seems to be the immediate problem with wheat, and Mercantile is watching yield outcomes in the EU and in Russia where there are questions about the crops in the Rostov and Volga regions (Mercantile says Siberia seems to look good). Mercantile would hold sales for now.