We’re starting to see planting conditions improve as field activity is increasing on both sides of the border. Tensions in Ukraine remain relatively high as pro-Russian separatists are amplifying their voice in non-eastern parts of the country, such as Odessa, which is Ukraine’s third-largest city and a major grain export port. Already it’s expected that Ukraine’s wheat and corn exports will fall considerably from the 2013/14 marketing year thanks mostly to a smaller crop. Here in North America, it’s expected that by mid-May, at least 60 per cent of the U.S. corn crop should be planted but dry conditions continue to affect the winter wheat crops. If the predicted El Nino event surfaces late this summer, it could prove positive for the U.S. corn crop though. On that note, Environment Canada is forecasting a bigger chance of a cooler May, June, & July for most of the Canadian Prairies. While they admit there is some chance for warmer temperatures too, it’s less likely that scorching Celsius numbers will be seen (you should still be able to get that farmer’s tan though!).
Statistics Canada put out the March 31st grain stocks report and wouldn’t you know it, there’s a lot of Canadian grain available. Total wheat inventories totalled 21.25 million tonnes, up 47 per cent from a year ago, while available canola came in at a whopping and new all-time high of 9.02 million tonnes, way up from last year’s number of 4.53 million tonnes. All cereal grains supply is notably higher while decreasing available stocks is seen in rye (-39 per cent to 80,000 tonnes), canaryseed (-54 per cent to 39,000 tonnes), soybeans (-13.6 per cent to 1.2 million tonnes), lentils (-41 per cent to 648,000 tonnes).Granted, this numbers have likely dramatically changed since the survey was taken as railroad movement has improved thanks to the government’s prodding. U.S. railroad company Burlington Northern is spending one billion dollars in its Northern Corridor states, including $560 million for North Dakota and Montana (this is important for Canadian grains’ access via railroad into the U.S.).
One of the grains we’re seeing going across the border more is wheat as the U.S. winter crop is having a heck of time developing. However, the U.S. is not the end of the line when it comes to wheat production and Informa recently put their 2014/15 world wheat crop estimate at a record 713 million tonnes, despite smaller crops forecasted for Russia, Ukraine, & the US (as mentioned). One region seeing pretty good conditions right now is the E.U. with crop development ahead of schedule (especially wheat and rapeseed). Combine this with the large carryout here in Canada and what looks to be another decent-sized crop coming off in the Prairies, it unfortunately sets up more a bearish scenario through til next spring versus anything definitively bullish.
Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online and now mobile grain marketplace (app available for iOS & Android). His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (firstname.lastname@example.org) or phone (1-855-332-7653).