Wild Oats Grain Market Advisory

Sample Issue

August 25, 2015 Vol. 26 No. 03

Creating Wealth for Prairie Farmers

[Analysis & Strategies] [WCE] [CBOT] [Options] [Crop Sales]
[MB Farmgate Prices] [SK Farmgate Prices] [AB Farmgate Prices]
[From the Floor] [Street Smart]

Agricultural News

Economic Contagion
Several countries around the world are in recession or slow growth. Commodity prices have been generally weakening for months. Now stock markets are retreating, hard. These losses can feed on themselves as leveraged investors are forced to sell assets to raise cash.

StatsCan: Western Canadian Crop Production Report Released

       Production of Principal Field Crops
         Statistics Canada Aug 21, 2015

                   2013     2014     Aug'15   2014-Aug'15
                     thousands of tonnes        %Chng
Total wheat      37,530    29 281    24 625     -15.9
 Durum wheat      6,505     5,193     4,467     -14.0
 Spring wheat    27,239    21,222    17,971     -15.3
 Winter wheat     3,786     2,867     2,187     -23.7
Barley           10,237     7,119     7,305       2.6
Canary seed         131       125       134       7.1
Canola           17,966    15,555    13,343     -14.2
Chick peas          169       123        86     -29.8
Dry beans           206       273       244     -10.9
Dry field peas    3,961     3,445     2,921     -15.2
Fall rye            223       195       231      18.4
Flaxseed            724       847       884       4.4
Lentils           2,173     1,987     2,083       4.8
Mustard seed        155       198       109     -44.7
Oats              3,906     2,908     3,312      13.9
Sunflower seed       52        55        94      71.1

     The StatsCan production report, compiled from late July surveys, was not a market-mover, although canola was stronger than soyoil the day of the release. Actual canola production will probably be higher given recent rains but not by enough to materially affect markets.
     Wheat production will be lower even than earlier estimates, especially in Alberta.
     Durum fell into the middle of the range of estimates.
     Barley and peas are the two crops that prairie farmers probably wished they had grown more of.
     Canary’s final production number may be that most positively affected by late rains. Regardless, supplies remain very much on the tight side.
     Flax production is climbing, as market signals have been positive until this summer.
     Lentil production is coming up nicely and this bigger crop is moving well.
     Mustard’s lower production point points to a robust market for farmers with product to sell.

China Introduces New Barley Import Requirements
     Canada sells little, or no, barley or DDG’s to China but nevertheless there are changes coming to prairie grain marketing thanks to new Chinese government policies.
     China has long had a policy of overpaying for domestic corn as a tool to keep farmers on the land. Their current price is about US$9.20/bu. Farmers, of course, sell to the highest bidder and the Chinese government has become the owner of 120 million tonnes of corn, about 10% of total global corn stocks. They are trying to sell down that stockpile but it’s hard to find buyers with imported corn trading at US$6.50. China shut down American corn imports over a year ago, based on “GM contamination”.
     Now China has decided to control imports of sorghum, DDG’s and barley. Effective Sep 1, 2015 all these imports will have to be registered with the Chinese government. Registration includes the name of the producer, seller and shipper.
     If you’ve been wondering about the declarations your elevator gets you to sign, it’s because they can see the day when they will have to include your name on their export shipments.

Futures Mixed
     Most contracts are little changed on the week. Soybeans are down 27 cents/bu but the Canadian dollar continues to tank – under 75 cents now – and canola is $3/t higher. Stock and commodity markets around the world had a tough day Monday on the backlash of Chinese financial worries. There are concerns that China, the world’s largest soybean importer by far, may cut their rate of imports. Probably the last thing that the Chinese government will do is reducing food imports. Soybeans did hit multiyear lows in Monday overnight trade. The Pro Framer tour placed American yields at 46.5 bu/ac adding weight to USDA’s bearish production estimate.
     Canola was supported by cool and wet weather on the prairies adding production uncertainty.
     Wheat and corn are trending lower.

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Analysis & Strategies

Canola Production Comes Within Range - Jerry Klassen
     StatsCan has canola production at 13.3 million mt, down from last year’s crop of 15.6. The survey came within analysts’ expectations so this was no surprise to the market. Harvest is progressing quite rapidly across the prairies with the canola about 15% harvested. We expect to see aggressive farmer selling over the next couple weeks which will pressure the market.
     Canola prices continue to receive spillover pressure from the bean complex and more specifically from the sluggish world vegetable oil market. Soyoil futures dipped down to 8 year lows this past week. It appears that the weaker crude oil values, limited Chinese demand and the sharp year-over-year increase in U.S. soybean production could cause canola to grind lower through harvest.
     The U.S. dollar appears to be weakening with the decline in equity values which could cause a moderate rebound in the Canadian dollar.
     We want to remind producers Wild Oats is 40% sold on the 2015 production. Stay close as we will use any bounce in the market to add to our sales.

Sell Milling Wheat
     StatsCan has non durum wheat production at 18.0 million mt, down from the 2014 crop of 21.2 and sharply lower than 2013 production of 27.2.
     The lower production estimate had little influence on the Minneapolis futures as any shortfall in Canada is being made up from other major exporters. There will be no shortage of rail capacity this year given the sharp year-over-year decline of all major crops. U.S. import demand for Canadian high protein wheat will also be down from year-ago levels due to a high quality crop south of the border.
     Despite adverse conditions earlier in spring, Ukraine and Russian wheat production will experience a marginal year-over-year increase in production and we have seen Black Sea origin wheat move into central and south America. These are traditional homes for U.S. and Canadian wheat. U.S. hard red spring wheat is expected to finish at 15.7 million mt, up from 15.1 million mt in 2014 and U.S. hard red winter finished at 23.2 million mt, compared to 20.0 million mt last year. The world market is also experiencing the lack of a major importer, besides Egypt and the Middle East where Canadian origin cannot be competitive.
     Given the strong competition on the world market, our strategy is to make regularly timed sales throughout the crop year. Sell 20% of your milling wheat at harvest.

Durum Update
Be 40% sold on your 2015 durum. Prices have dropped over the past couple weeks. Catch up despite the lower prices because there is further downside potential. StatsCan’s estimate of 4.5 million mt was within trade estimates. Quality reports suggest the crop will be very good quality coming on the heels of a higher quality and larger French crop. We are not going to see strong demand from the U.S. millers as experienced last year.

Sell Lentils – John Duvenaud
     Green lentil markets are hot as buyers grab the limited supplies of top quality. Green lentils generally have the same quality as last year, which wasn’t the best. An inch or so of rain over the weekend will have made the supply of #1 greens even tighter. A #1 Laird should bring you somewhere in the low 40 cent range. A #1 Eston, if there are any, should bring in the high 30”s.
     Reds are steadier. Reds fetch about 37 cents/lb fob or 38 cents delivered. Prices are up about 6 cents from spring and have been fairly steady through harvest. Red markets are global markets with much of the strength coming from a sub-par crop in India.
     The Canadian crop this year will probably end up larger than that of last year. Plantings were up significantly and, although yields are down, production should be about 2.2 million tonnes compared to 2 mln in 2014. Red production will be about 1.7 mln tonnes with about 600,000 tonnes of greens. Last year there were 1.4 mln tonnes of reds and 560,000 tonnes of greens.
     Demand is good right off the combine. Indian production is off 2 million tonnes from a year ago and they are buying for immediate shipment.
     Take advantage of current strong demand. Sell the third 20% increment of your 2015 lentils.
     Prices for all lentils will probably soon start to ease off. Once immediate shipping demands are filled it may prove hard to sell 43-cent Lairds. These are high prices, well above our 5 and 10-year averages. Lentils are just one of many pulse crops and prices will not maintain this big of a premium forever. A lot of current demand will soon fade..
     Red prices may also soften through the winter.

Pea Trade Still Dominated by Majors
     Demand for yellow peas remains red hot. Bulk shippers (i.e. elevator companies) are moving out yellows in volume to China and everybody else is more or less on the sidelines. Independent processors can’t compete. There is little demand for container shipment.
     This is a case where the line elevators are working for the farmer. They’re paying $9 plus a bushel for a crop that probably cost you about $6.50/bu to grow, taking all you can deliver and utilizing their ability to move large volumes efficiently.
     Greens are another story. There just isn’t a lot of demand for greens. It’s fall (face it) and green demand is strongest in winter so neither Europe or South America has any immediate need. There is always limited demand for greens and, if anything, it seems to be easing. In addition, there are plenty of other suppliers of green peas.
     It’s only recently that green markets have started operating. You should be able to find $7.75/bu delivered. That’s not what you want, I know, but history tells us that holding supplies off a weak market rarely leads to better prices. Sitting on a stagnant market tends simply to stall everything. Wild Oats is 40% priced on peas. If you haven’t managed to move any greens start picking away at markets that do show up. It will probably be next year, after green seedings drop once again, that greens again trade at a premium to yellows.

[Contents]

Futures & Options Markets

From the Floor

Opinion derived from traders

     The best place to be in the future will be as a farmer. You’ll control a grain production business with two critical and very hard to replace assets - your land and your operation.
     Robots got started as a way to automate routine jobs and they keep getting better. Artificial intelligence already allows robots to evaluate loaning money, the traditional job of a bank manager, and they will continue to improve and do more functions we consider to require human skills.
     Most humans have only another generation to work, if that. At least work that pays a wage. Every increase in the minimum wage leads to another round of robotization.
     Farmers are already significant users of robots. That is only going to increase. Farming may become one of the more automated industries.

Street Smart - Al Brooks

The stock market is the only market where things go on sale and all the customers run out of the store.
Al Brooks is a New York fund manager.

[Contents]

Manitoba Farmgate Prices:
Prices are FOB farm, unless noted otherwise, as of August 25, 2015. Your local rate may differ.

Basis Net Per Bushel Canola: Prices under Nov at $477 Del Elevator 15 - 35 443 - 463 10.04 - 10.49 Del Elev Fall 2015 13 - 33 444 - 464 10.08 - 10.53 Bunge (del) Harrowby: $10.26 - 10.49 (Aug/Sep); $10.31 (Oct); 10.37 (Nov) Altona: $10.37 - 10.49 (Aug/Sep); $10.44 (Oct); $10.53 (Nov) Barley Del Elevator 184 4.00 Malt Del Elevator 216 - 241 4.70 - 5.25 Wheat Feed Del Elevator 175 4.75 Feed FOB Farm 165 - 184 4.50 - 5.00 Milling Wheat (Del Elev) CWRW #2 155 - 179 4.22 - 4.88 CWRS #1 198 - 227 5.39 - 6.19 Fall 2015 199 - 230 5.41 - 6.25 CPSR 165 - 170 4.48 - 4.62 Fall 2015 168 - 172 4.58 - 4.68 Flax $13.00 Oats $2.60 Lentils Lairds: #1: 40¢; 34 - 41¢ del Sk; #2: 35 - 40¢; 30 - 39¢ del Sk X3: 26 - 30¢; 27 - 33¢ del Sk; #3: 20 - 22¢; 22 - 28¢ del Sk Eston: #1: 32 - 35¢; 30 - 34¢ del Sk; #2: 30 - 32¢; 27 - 31¢ del Sk X3: 23 - 27¢ del Sk; #3: 20 - 24¢ del Sk Richlea: #1: 30 - 35¢ del Sk; #2: 34 - 37¢; 30 - 39¢ del Sk X3: 27 - 28¢; 27 - 28¢ del Sk; #3: 21¢; 22 - 26¢ del Sk Crimson: #2+: 36 - 37¢; 30 - 35¢ del Sk; X3: 27 - 35¢; 22 - 32¢ del Sk #3: 21 - 26¢; 24 - 30¢ del Sk Canary Seed 28 - 28.5¢; 23 - 30¢ del Sk Sunflower Oil: 21 - 22¢; 23 - 25¢ del Conf: not quoted Peas Green: $7.00 - 8.50; $7.00 - 8.50 del Sk Yellow: $8.25 - 8.75; $8.50 - 9.55 del Sk Feed: $5.00 - 5.50; $6.75 del Mustard Yellow: 42 - 45¢; 43 - 45¢ del Sk Brown: 27 - 33¢; 30.5 - 32¢ del Sk Oriental: 35¢; 34 - 36¢ del Sk Corn (del) $4.30 - 5.00; $3.75 - 3.90 Fob Farm Fall 2015: $4.28 - 4.70 del Soybeans (del) $9.02 - 9.38 Fall 2015: $9.03 - 9.49 Delivered North Dakota Plant/Elevator - $US/bu [$Cnd/bu in brackets] DNS [14%]: $4.07 - 4.44 [$5.42 - 5.91] Durum: $5.75 - 6.50 [$7.66 - 8.66] Oats: $1.70 - 2.00 [$2.26 - 2.66] Flax: $8.80 - 10.00 [$11.72 - 13.32] Corn: $2.61 - 3.01 [$3.48 - 4.01] Fall: $2.72 - 3.12 [$3.62 - 4.16] Barley Feed: $1.88 - 2.35 [$2.50 - 3.13] Malt: $3.41 - 4.01 [$4.54 - 5.34] Soybeans: $7.63 - 7.93 [$10.16 - 10.56] Canola: $6.75 - 7.69 [$8.99 - 10.24] Peas Yellow: $6.00 - 7.00 [$7.99 - 9.32] Green: $5.00 - 5.25 [$6.66 - 6.99] Sunflwr NuSun: 17.1 - 17.3¢ [22.8 - 23.0¢] Fall: 15.1 - 17.1¢ [20.0 - 22.7¢] Dry Beans Pinto: 20.0 - 21.0¢ [26.6 - 28.0¢] Navy: 23.0 - 25.0¢ [30.6 - 33.3¢] Black: 29.0¢ [38.6¢] Kidney (LRd) not quoted

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Saskatchewan Farmgate Prices:
Prices are FOB farm, unless noted otherwise, as of August 25, 2015. Your local rate may differ.

Basis Net Per Bushel Canola: Prices under Nov at $477 Del Elevator 10 - 40 438 - 467 9.93 - 10.60 Del Elev Fall 2015 11 - 40 438 - 466 9.93 - 10.57 Bunge (del) Nipawin: $10.10 - 10.37 (Aug/Sep); $10.06 (Oct); $10.17 (Nov) Dixon: $10.15 (Aug/Sep); $10.17 (Oct); $10.17 (Nov) Nexera: $11.17 - 11.51 (Aug/Sep); $11.19 - 11.43 (Oct); $11.24 - 11.45 (Nov) Barley Feed Del Elevator 156 - 184 3.40 - 4.00 FOB Farm 170 - 175 3.70 - 3.80 Del Elev Fall 2015 157 - 184 3.41 - 4.00 Malt (FOB Farm) 218 - 241 4.75 - 5.25 Del Elev 253 5.50 Wheat Feed Del Elevator 169 - 211 4.60 - 5.75 FOB Farm 165 - 184 4.50 - 5.00 Del Elev Fall 2015 173 - 102 4.70 - 5.50 Milling (Del Elevator) CWRW #2 159 - 176 4.34 - 4.78 CWRS #1 204 - 221 5.55 - 6.00 Fall 2015 205 - 222 5.57 - 6.04 CPRS #1 171 - 187 4.66 - 5.09 Fall 2015 174 - 194 4.73 - 5.28 Durum #1 301 - 305 8.20 - 8.31 FOB Farm 312 8.50 Fall 2015 (Del Elevator): 301 - 313 8.20 - 8.51 Flax $13.00 - 13.50 Oats $2.60; $2.02 - 2.60 del Lentils Laird #1: 40¢; 34 - 41¢ del; #2: 35 - 40¢; 30 - 39¢ del X3: 26 - 30¢; 27 - 33¢ del; #3: 20 - 22¢; 22 - 28¢ del Eston: #1: 32 - 35¢; 30 - 34¢ del; #2: 30 - 32¢; 27 - 31¢ del X3: 23 - 27¢ del; #3: 20 - 24¢ del Richlea: #1: 30 - 35¢ del; #2: 34 - 37¢; 30 - 39¢ del X3: 27 - 28¢; 27 - 28¢ del; #3: 21¢; 22 - 26¢ del Crimson: #2+: 36 - 37¢; 30 - 35¢ del; X3: 27 - 35¢; 22 - 32¢ del #3: 21 - 26¢; 24 - 30¢ del Canary Seed 28 - 28.5¢; 23 - 30¢ del Sunflower Oil: 21 - 22¢; 23 - 25¢ del Conf: not quoted Peas Green: $7.00 - 8.50; $7.00 - 8.50 del Yellow: $8.25 - 8.75; $8.50 - 9.55 del Feed Peas: $5.00 - 5.50; $4.75 - 6.30 del Chickpeas Desi #1: 16-17¢; Kabuli 10mm: 23-25¢; 7/8/9mm: 23-24¢ FOB Farm Mustard Yellow: 42 - 45¢; 43 - 45¢ del Brown: 27 - 33¢; 30.5 - 32¢ del Oriental: 35¢; 34 - 36¢ del

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Alberta Farmgate Prices:
Prices are FOB farm, unless noted otherwise, as of August 25, 2015. Your local rate may differ.

Basis Net Per Bushel Canola: Prices under Nov at $477 Del Elevator 0 - 30 447 - 477 10.15 - 10.83 Bunge 25 - 28 449 - 452 10.19 - 10.26 Nexera: $11.39 - 11.73 (Aug/Sep/Oct/Nov) Barley Feed Del Elevator 168 - 215 3.65 - 4.68 Lethbridge 215 4.68 Vermillion 208 - 214 4.53 - 4.66 Rycroft 195 - 205 4.25 - 4.46 Wheat Feed Del Elevator 178 - 220 4.83 - 5.99 Lethbridge 214 - 220 5.82 - 5.99 Brooks 210 - 218 5.72 - 5.99 Rycroft 204 - 212 5.55 - 5.77 Milling (Del Elev) CWRS #1 214 - 229 5.82 - 6.22 Fall 2015 215 - 231 5.84 - 6.29 CPRS #1 188 - 200 5.13 - 5.44 Fall 2015 192 - 202 5.23 - 5.51 Durum 312 - 318 8.50 - 8.66 Oats Del Elevator 165 - 178 2.59 - 2.75 Lethbridge 170 - 178 2.62 - 2.75 Brooks 168 - 175 2.59 - 2.70 Rycroft 165 - 173 2.54 - 2.67 Flax $12.25 - 13.20 Rye $5.50 - 6.20 FOB Farm Lentils Laird:#1: 40¢; 34 - 41¢ del Sk; #2: 35 - 40¢; 30 - 39¢ del Sk X3: 26 - 30¢; 27 - 33¢ del Sk; #3: 20 - 22¢; 22 - 28¢ del Sk Eston: #1: 32 - 35¢; 30 - 34¢ del Sk; #2: 30 - 32¢; 27 - 31¢ del Sk X3: 23 - 27¢ del; #3: 20 - 24¢ del Richlea: #1: 30 - 35¢ del Sk; #2: 34 - 37¢; 30 - 39¢ del Sk X3: 27 - 28¢; 27 - 28¢ del Sk; #3: 21¢; 22 - 26¢ del Sk Crimson: #2+: 36 - 37¢; 30 - 35¢ del Sk; X3: 27 - 35¢; 22 - 32¢ del Sk #3: 21 - 26¢; 24 - 30¢ del Sk Canary Seed 28 - 28.5¢; 23 - 30¢ del Sk Peas Green: $7.00 - 8.50; $7.00 - 8.50 del Sk Yellow: $8.25 - 8.75; $8.78 - 9.21 del Feed: $6.37 - 6.94 del Chick Peas Desi: #1: 16 - 17¢ Kabuli: 10mm 23 - 25¢; 7/8/9mm 23 - 24¢ Mustard Yellow: 42 - 45¢; 43 - 45¢ del Sk Brown: 27 - 33¢; 30.5 - 32¢ del Sk Oriental: 35¢; 34 - 36¢ del Sk Delivered Montana Elevator - $US/bu [ $Cnd/bu in brackets ] DNS [14%]: $4.30 - 4.97 [$5.73 - 6.62] Durum: $6.50 - 6.75 [$8.66 - 8.99] HRW [13%]: $3.66 - 4.56 [$4.88 - 6.07] Barley Feed: $2.40 - 2.64 [$3.20 - 3.52] Malt: $4.80 - 4.92 [$6.40 - 6.55] Delivered Colorado Plant/Elevator - US¢/lb [ $Cdn/lb in brackets ] Pinto: 20.0¢ [26.6¢] Kidney Lt Red: not quoted

[Contents]

     Wild Oats is published 40 times per year by Wild Oats Publishing, 958 - 167 Lombard Avenue, Winnipeg R3B 0V3. Tel. (204) 942-1459 Fax (204) 942-7652 E-mail: wildoats@canadagrain.com
      Information is secured from sources believed reliable, but 100% accuracy cannot be guaranteed. Persons associated with Wild Oats deal commercially with businesses active in Prairie grain markets and may hold positions on their own accounts in commodities discussed herein. ISSN 1185-2194
      Copyright 2015. All rights reserved. The Wild Oats Grain Market Advisory is protected by copyright. Copying, retransmission or redistribution, in whole or in part, without the prior written approval of Wild Oats Publishing is strictly prohibited.

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