The agency’s previous report on Aug. 29 already provided insight as to what production numbers were going to be, he said, but still warned the model-based projections in the latest report will not be as accurate as the survey-based report due out in December.

“Given how advanced the crop was on the (previous) report on Aug. 29, we probably had a pretty good idea as to where the problem areas were, in terms of the brownness that you’d see from the satellite (imagery),” Jubinville said.

“In the good areas where it was greener, it was a little difficult to say exactly how well those areas are performing. I think, from a trade point of view, they believe the numbers are probably saying that production is a bit understated.”

Despite questions over the report’s accuracy, adjustments to the production figures compared to the August report were modest and mostly expected. One of the few surprises was the canola production estimate being revised downward by nearly 200,000 tonnes, to 17.368 million, after the trade had expected a 300,000-tonne raise.

However, Jubinville doesn’t think any of the adjustments, including that for canola, had effects on the markets.

“Canola operates in an environment of many oilseeds and vegetable oils from a global perspective. What happens in Canada doesn’t necessarily change the price unless we have a dramatic issue above expectations or below expectations,” he said. “But I don’t think (today) was enough here to really change the market outlook for now.”

The report highlighted how much the hot and dry weather in the Prairies cut production for Canada’s major crops. Other than small increases for chickpeas, corn, mustard seed and winter wheat, all other crops saw decreases compared to 2022-23.

“Canada doesn’t have an abundant supply this year,” Jubinville remarked.

Yield estimates for cereals were the hardest hit by the summer weather, with yield declines in wheat (down 17.6 per cent), including durum (29 per cent) and spring wheat (18 per cent). Barley yields are estimated down 22.2 per cent from 2022-23, while oats, which already saw a major drop in seeded area, saw its yield fall by 21.2 per cent, causing a 53.4 per cent drop in production.

“I think (the declines roughly fall) within the range of expectations,” Jubinville said. “Barley is tight, but the price of barley is too high for export. That’s OK. We’ll feed it domestically.

“As such, we are going to be tied to the hip to what the U.S. corn market is doing. And if U.S. corn is under pressure, barley is going to feel that pressure, competitive pressure,” he said.

“Oats have coverage in the immediate weeks and months going forward (because of last year’s crop). But with this small crop, we have a tightness scenario that is going to be felt in the second half of the (marketing) year and the market’s going to have to respond.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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“Spreaders for the last few days have been selling canola and buying soyoil,” Ball suggested in a July 26 interview, noting that canola lost between C$60 to C$70 per tonne prior to the latest turnaround. 

While it’s uncertain as to how long canola could be on the upswing, Ball expected it to last at least two to three days. 

“Meanwhile crush margins are oscillating wildly…which must drive the packers nuts,” he commented. 

Ball said it’s hard to tell who exactly is behind the upward shift in canola, but it might even be some of the packers themselves. 

Rain across most of the Prairies during mid-July brought some relief to struggling crops, although some areas of the region missed out while other parts have received too much, the trader said. 

“I would say overall canola has improved considerably in many areas, but not in all,” he asserted. 

As several of the grains and oilseeds made modest to sharp gains recently, with some trimming back, Ball said the markets will now pause to see how the crops finish developing.   

“Then they’ll make their move from there,” Ball said of the trade. 

He also said the next supply and demand estimates from the United States Department of Agriculture need to be watched closely, noting “it’s going to be a big one.” 

“The markets are not sure if the USDA is going to deal with the acreage issue or not,” Ball stated. 

The June report placed planted soybean acres in the U.S. at 87.5 million, while the July report cut that down to 83.5 million. Corn acres were increased from June’s 92.0 million to 94.1 million. 

“And it’s the first full surveyed yield for the corn and soybean crops,” Ball added. 

The USDA will publish its supply and demand report on August 11 at 11 am CDT. 

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Analyst Bruce Burnett just recently completed a crop tour covering most of Saskatchewan.

“Unfortunately, I don’t have a lot of good news on the crop front,” he told growers attending the Ag in Motion show in Langham, Sask.

“There has been a lot of damage done to the crop this year because of drought.”

VIDEO: In Prairie crops, results may vary

Spring wheat yields for Western Canada are pegged at 46 bushels per acre, down 11 per cent from last year.

Canola is forecast at 33 bu., a 13 per cent drop.

Barley is estimated at 56 bu., a 20 per cent decline.

Durum yields are expected to come in at 26 bu. per acre, a 24 per cent freefall.

Burnett said the odds of losing bushels in the coming weeks is greater than gaining them, due to a hot and dry weather forecast for the Prairie region.

Production of major crops such as spring wheat, canola and barley is forecast to be down nine to 11 per cent compared to last year.

Smaller crops such as durum, lentils, peas and oats will be hit harder, with production falling between 20 and 49 per cent.

The global durum market needed 7.5 to eight million tonnes of production out of Canada, but it will be closer to four million tonnes.

There is huge demand for durum out of North Africa, so expect prices to rise, said Burnett.

The same is true with other crops where Canada is the major global supplier, such as lentils.

Burnett was asked if canola prices will return to last year’s lofty levels of $20 per bushel.

He said that will largely depend on the U.S. soybean crop. The forecast for the corn belt is for hot and dry conditions over the next few weeks, so $20 is at least in the realm of possibility.

Global vegetable oil stocks are already tight and a small palm oil harvest is expected this year. If the U.S. soybean crop falters, vegetable oil prices will climb, pulling canola along for the ride.

Burnett said Western Canada’s dismal yield prospects are due to poor subsoil conditions in the western half of the Prairie region heading into the growing season, followed by lacklustre rain so far this year.

A lot of the crops with the biggest production declines, such as durum and lentils, are produced in southwestern Saskatchewan and southern Alberta, where drought is most pronounced.

Burnett said the agriculture industry won’t have to wait too long to see if his yield forecasts are correct because the crop is about seven to 10 days ahead of normal development.

Harvest is going to be early this year.

— Sean Pratt reports for the Western Producer from Saskatoon.

The post At Ag in Motion: Significant Prairie yield drop expected appeared first on Country Guide.

The November canola contract went from settling below the C$800 per tonne mark (C$797.50/tonne) on July 12 to exceeding the C$850 mark for the first time since last November on July 19, rising C$44.20/tonne to close the week at $841.70. Canola was on an eight-day rally after trading finished on July 19, its longest since April 2021. 

David Derwin, an analyst at PI Financial in Winnipeg, said while canola fields in southern Manitoba are looking golden and healthy, looks can be deceiving. 

“There are still a lot of dry patches and a lot of concern for what yields are looking like. But having said that, a lot of people are saying everything is looking really good,” Derwin said. “The weather is what seems to be dominating the stories recently.” 

Canola was also benefiting from carryover from United States soybean futures. The August soybean contract went up 47.25 U.S. cents per bushel to US$14.9150 during the week, while August soyoil went up 1.71 U.S. cents per pound to 66.05 during the same span. 

“Canola has also had a nice additional push at the same time as soybeans since the U.S. Department of Agriculture changed the acreage numbers for soybeans (earlier this month),” Derwin said. 

Prices were also lifted by Russia’s withdrawal from the Black Sea Grain Initative on July 17 and its subsequent attacks on the Port of Odesa. 

“(The situation) is what’s pushing prices for all the grains up, including canola,” Derwin added. 

If November canola continues at the previous week’s pace, the C$900 mark could be surpassed by the end of the month. However, Derwin said it’s anyone’s guess if or when that level will be reached. 

“Never say never when it comes to the markets,” he quipped. “From what I’ve read (the period) until the end of July will be the same in terms of dry and hot. Could it be C$900 by the end of the month? Sure, that’s not out of the question.” 

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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A bearish reaction in the Chicago soy complex to the latest supply/demand estimates (WASDE) from the U.S. Department of Agriculture did little to stall the upward trend in canola, with the Canadian market continuing to show some independent strength despite the losses in soybeans and soyoil.

November canola hit a contract high of $806.90 per tonne on Wednesday, but settled just below $800.

In addition to chart-based positioning, much of the strength in canola was tied to concerns over the state of the Canadian crop, according to MarketsFarm analyst Mike Jubinville. He said canola yields were unlikely to hit the 42 bushels per acre trendline, with 38 or lower more likely given the current dryness.

Jubinville said there was more room to the upside in canola from a technical standpoint, with demand rationing also supportive.

However, he added, a serious downward correction in the soy complex would likely spill over to the canola market.

While USDA’s decision to leave average soybean yields at an all-time record of 52 bu./ac. in Wednesday’s report was bearish, Jubinville expected the government agency was just being conservative with downward revisions to the size of the U.S. soybean crop likely in subsequent reports.

“The USDA has a way of inching towards what the real number is,” he said.

“I don’t think this creates a lasting trend in the soy complex and (the market) will immediately go back to trading weather.”

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.

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The east has enough moisture — and in some cases too much. And it gets progressively drier toward the west, with portions of Alberta nearing critical condition, according to one weather watcher.

Bruce Burnett, weather and markets director for the MarketsFarm division of Glacier FarmMedia, said the soil moisture picture is better than in past years, but still concerning in some regions.

“We are a little bit better than we were last year for moisture, especially topsoil moisture, because of the way some of the winter precipitation patterns have been,” he said. “But realistically the subsoil moisture remains very short and some key growing areas, especially western parts of Saskatchewan and southern Alberta.

“That’s specifically the area I’m most concerned about,” he added.

Burnett added the Prairie winter was a relatively mild one, especially in the western half, with the coolest temperatures also seen in the east of the region.

“We didn’t have a brutal winter in terms of temperatures,” he said.

Alberta dry

Laura Richard, an agroclimate analyst with AAFC, says a long, cold winter has made soil moisture detection in Alberta difficult, thanks to extended snow cover.

Going by winter precipitation, however, southern Alberta is looking strong while the rest of the province — particularly the central, northeast and Peace regions — is going to need a spring recharge as it continues to bounce back from the 2021-22 drought.

“Generally speaking, regions south of Calgary have gotten between 60 and 115 per cent of average precipitation so those are our areas of real recovery,” she said. “The southern areas also received good fall moisture going into winter.

“Unfortunately there’s a big swath between Edmonton and Calgary as well as the northeast where they’ve only received 40 to 60 per cent of normal precipitation. That’s not dire, but given the dry conditions these areas went into winter with there’s still some concern over the soil moisture.”

The same goes for parts of the Peace, Richard said.

“Southern portions of the Peace got more precipitation but the central and northern parts were definitely in that less than 60 per cent of normal precipitation.”

If there’s any comfort for producers in drier areas, it’s the fact that spring rains are what Alberta farmers generally count on even in the best of years.

“We know for sure that it’s the rains in June and July that really determine the quality of the crops and that’s how Alberta actually gets the majority of its moisture,” Richard said.

Snowpack generally looks good in dry areas around Edmonton and the Peace. However, it can be hard to count on until it’s melted.

“Just because snow falls in one location doesn’t mean that’s where it’s going to melt and percolate through the soils,” she said.

“It depends on how quickly it melts, how much rain we get and what our temperatures are like — all of that can really affect where that moisture actually gets into the soil. So until we have that snowmelt it’s really hard to predict where the areas of greatest concern are going to wind up being.”

Saskatchewan variable

In Saskatchewan the soil moisture situation seems to be reasonable in most of the eastern part of the province, except for the extreme southeast corner, but getting drier to the west.

Matt Struthers is a crop extension specialist with the Moose Jaw office of Saskatchewan Agriculture and is editor of the province’s weekly crop report. He said south and west of his location, the moisture picture gets “a little spotty,” with areas of adequate snowfall this winter interspersed with areas that didn’t see much accumulated snowfall.

“As you move into the southwest — around Swift Current, Shaunavon and Consul — it’s a bit drier this spring, and they’re likely to need some timely spring rains,” he said.

Speaking with Glacier FarmMedia on April 11, he noted the slower start to the spring might be a positive, provided it didn’t get too late for seeding to be accomplished in a timely manner.

“Being that it’s a bit later, that may help conserve that moisture and aid germination once we get that seed into the ground,” he said. “But of course, people — including me — might be a little anxious about how long we might be delayed.”

Farming in the region is a question of managing around the variability of its climate, he said, and noted that in just the past couple season the province’s farmers have coped with significant variability. Spring 2021 was very dry. Spring of 2022 was really wet in the eastern half of the province. And this year is a late spring.

“Historically, we’ve been here before, we’ll be here again, I don’t really start to worry until July rolls around and another heat dome sets up,” he said.

Some good news accompanying the slow spring is flying under the radar, he noted — namely, that cooler weather and moist conditions are likely taking a bit out of the grasshopper population as larvae and nymphs succumb to the conditions.

“Last year this area had a big problem,” he said. “We had a dry spring, it warmed up quickly, and the grasshopper population thrived.”

The cooler weather might delay seeding, but it’s also delaying the pests, he noted — a case of Mother Nature both giving and taking away.

“I’m hoping for a lot of give this year,” he said with a chuckle.

Keystone OK

Timi Ojo echoed that soil moisture levels appear to be adequate across most of Manitoba heading into spring seeding.

“I wouldn’t expect that we would have an issue with soil moisture this year,” said Ojo, an agriculture meteorology specialist for Manitoba Agriculture.

“In most places, soils were sitting at about 80 to 100 per cent of their available water holding capacity (AWC) from the fall.”

In a typical spring, even if there hadn’t been a late-season storm and even if the ground hadn’t remained frozen longer than normal, the situation would still look pretty similar in terms of soil moisture, especially with AWC numbers where they currently sit, he said.

“Most of the precipitation received over the winter doesn’t actually have a significant impact directly on soil moisture,” Ojo explained. “The two main pathways for precipitation are either to infiltrate the soil or to flow overland. And in the spring, one of the things we see is that most of the precipitation is partitioned towards overland runoff.”

The only areas of the province that may have concerns with soil moisture are areas that were dry in the fall (areas south and west of Duck Mountain, for instance), or areas with low water holding capacity to begin with because of having sandy, coarse soils (the southwest corner of the province around Melita and Pierson). But even in those areas, Ojo said, producers shouldn’t panic.

“I wouldn’t be too worried about it,” he said. “It’s quite early; we expect to have some spring showers coming through.”

While Ojo said farmers are unlikely to see delays in seeding similar to those that emerged last year after the province was hammered with three consecutive Colorado lows, a different weather-related issue might hamper efforts to get crops established this year. With soils still frozen and below-normal temperatures projected between now and June, soil temperature could be a concern for farmers.

“We likely won’t have as much warming as we’d like,” he said. “If the soil temperature is not warming up enough, the seed is going to be in the ground for much longer, and it won’t germinate quickly,” he cautions. “Be mindful of that and watch the soil temperature at seeding depth.”

Weather watching

As always, Burnett said, it’s going to be a balancing act between soil moisture, which gives crops their start, and timely rainfall in the growing season.

“Most of the precipitation that we receive in the Prairies are in the May-June-July-August period,” he said. “If we don’t get normal precipitation during that time frame, and especially if we don’t get it at the right times, then we certainly see crops stress developing.”

Those areas with the lowest subsoil moisture levels are, unsurprisingly, at the highest risk.

“The problem with that is we have no, shall we say, capacity, to withstand severe periods of drought during the growing season,” he said. “So if you get into a dry spell in, let’s say, the first three weeks of July, then you see a lot of stress developing in the crops.”

Subsoil moisture won’t protect the crops entirely, but it’s a decent buffer against the vagaries of nature, as many producers will remember from the recent years of drought in the region, Burnett said.

In the short term he’ll have his eye on southern Manitoba, particularly the Red River Valley, as it works its way through any flooding issues and the late spring.

“It’s probably going to be about another three or four weeks before some farmers get on the fields just because of how much moisture there is around,” he said.

He says he’ll also be monitoring the shifting weather patterns. The La Nina phase that’s been affecting weather has ended and been replaced by a neutral phase that’s likely to be replaced by an El Nino.

“So that means that we probably are gonna see a different weather pattern than we’ve been experiencing for the last few years,” Burnett said.

— Reporting for Glacier FarmMedia by Gord Gilmour, with files from Don Norman and Jeff Melchior.

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Canada exported 534,000 tonnes of wheat to China in August and September, accounting for about 20 per cent of Canada’s total wheat exports-to-date. Japan, Bangladesh and the United States were other major importers during the time period.

Canada Western Hard Red Spring (CWRS) wheat accounted for all the Chinese demand.

The wheat exports to China through two months was roughly double what moved to the country during the same time the previous year, when China was only the sixth-largest wheat destination two months into the marketing year. Total Canadian wheat exports to China in 2021/22 came in at just under 700,000 tonnes.

China was also the top importer of Canadian barley and peas through September 2022, taking about 290,000 tonnes of barley and 360,000 tonnes of peas. That accounted for 78 per cent and 67 per cent of the respective totals.

China has imported about 125,000 tonnes of Canadian canola during the crop-year-to-date, which accounts for about 34 per cent of the total exports and was just slightly off the previous year’s pace.

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Oil content for number one quality canola across Western Canada ranged from 34.9 to 49.2 per cent, with the average coming in at 42.7 per cent. That compares with the Canada-wide average of only 41.3 per cent reported for 2021, but would still be behind the five-year average (2017-21) of 43.8 per cent.

Of the Prairie provinces, the average oil levels were highest in Alberta and B.C., at 43.2 per cent, with Manitoba at 42.8 per cent and Saskatchewan at 42.2 per cent.

There were 1,312 samples of number one quality canola sampled so far in Western Canada, with 21 samples for Eastern Canada. The preliminary data showed canola in Eastern Canada with average oil content of 45.0 per cent.

The post Canadian canola oil content up in 2022: Preliminary CGC data appeared first on Country Guide.

“I think you got canola somewhere in the winter months maybe trading close to $1,000 again in January,” he said.

Palmer placed his suggestion on the sharp upticks that soyoil has made over the last month at the Chicago Board of Trade (CBOT). He said spillover from soyoil will underpin canola’s rise during winter, along with support from other vegetable oils.

“I don’t see oil prices going down anytime in the near future,” Palmer said.

He also noted there has been little in the way of farmer selling of canola lately.

“Farmers are sort of cash adequate at this time,” Palmer said.

While canola prices on Nov. 2 were caught up in the general sell-off in the grain markets that morning, the analyst said the strength in oilseeds allowed canola and other veg oils to recover and climb higher.

That sell-off was generated by Russia’s announcement on Nov. 2 it would re-enter the Black Sea export agreement. On Oct. 30, Russia stated it was pulling out of the deal, when it accused Ukraine of launching drone strikes on the Russian Black Sea fleet based at Sevastopol. Ukraine denied it had anything to do with the attack.

With mediation by Turkey and the United Nations, Russia said it would rejoin the agreement provided Ukraine made assurances that it would not use the safe corridors for vessels to launch any future military attacks.

The post ICE weekly outlook: Watch for canola to climb higher  appeared first on Country Guide.

Four days after Russian officials said the country was pulling out of an agreement to allow Ukrainian grain shipments on the Black Sea, the Russian government announced on Nov. 2 it changed its mind and will re-enter the agreement after talks with Turkish President Recep Tayyip Erdogan.

Last weekend’s announcement caused a sharp rally in both corn and wheat markets, but more significantly for the latter on Oct. 31. But Russia’s about-face on Nov. 2 has caused a price collapse back towards levels from the previous week.

“Flip a coin,” Scott Capinegro of Barrington Commodities in Barrington, Ill. said. “It’s pretty hard to digest, but I still say Russia needs money. They don’t want to stop any grain shipments that they can… If it wasn’t for the Russia-Ukraine news out there, (the corn and wheat) markets never would have spiked up like they did this week.”

The sharp price swings in the wheat market due to the Russia-Ukraine conflict might persuade people to keep funds away, according to Capinegro.

“You always hear that funds love volatility. The small grain traders, spec traders, they do not. (Volatility) disrupts the market action and trends,” he said. “I believe wheat is still trying to find a bottom…and I still believe wheat still needs to be a leader in the grain complex.”

Later on Wednesday, the United States Federal Reserve announced it raised its policy interest rate by 75 basis points, in line with the predictions of most observers. While grain prices received a small boost after the announcement, it was not enough to erase the day’s losses. Capinegro said traders have already priced in the hike.

“(The rate hike) is not an unknown commodity. The stock market could rally, but it’s expected,” he said before the announcement.

Corn and soybean prices were also affected by events in Brazil, where large crops for both could reduce demand for crops in the United States and pressure the markets at the end of the calendar year.

“We’re lacking demand and sooner or later, that demand is going to affect our market,” Capinegro said. “If you have no demand, (production and carryout) mean nothing and you have to break the market to get demand back into it.”

Brazil’s election of Luiz Inácio Lula da Silva to the presidency in a narrow result on Oct. 30 caused supporters of incumbent Jair Bolsonaro to set up more than 300 road blockades. They are still ongoing after Bolsonaro reportedly told the country’s Supreme Court that the election “was over.”

Capinegro believes another political event could affect markets as mid-term Congressional elections in the U.S. take place on Nov. 8.

“How are the markets going to react if the ‘red wave’ does hit and the Republicans win (the House) and win the Senate? Do grains break? Because (people) think the stock market might rally and the Republicans would tell the Democrats, ‘Hey, this spending is stopping. It’s causing all the inflation,’” he said.

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