Smaller or bigger?

This week's FarmLead looks at crop conditions across the Canadian prairies.

As we close out the month of July and prep combines for Harvest 2016, there’s been a few comparisons to years past. For starters, there’s not many comparisons to years that started our fairly dry (and extremely dry in a few places) to very wet in the majority of Western Canada. Overall, crop conditions in the Canadian Prairies have dropped a bit with the recent rains but many market players, including grain companies, are still optimistic that we’ll see an above-average crop this year. The most common phrase heard at this time of year is always “it’s not in the bin yet”. Given the risk that still remains from getting the crop off, there’s a good chance that prices will stay near current levels until more about the crop is known. There’s a high likelihood though that the crop can only get smaller from here on out.

Already, we’ve seen estimates from some marketing consultants at 40 per cent of Western Canadian lentils acreage lost (those same people were calling for $20/bushel durum in 2014 and lost a lot of money for their clients who were waiting for that so…). Managing bearish and bullish coffee row talk would have us, with a more rational perspective, put things at about 15 per cent lost today with every rain in the next 3-4 weeks adding another point or 2, meaning we may see red bids back in the high 30s / low 40s cents per lbs and greens getting closer to 50 cents/lbs. The rains haven’t negatively impacted too many other fields though just yet, with crop conditions still sitting relatively high, but disease potential is increasing with the warmer conditions coupled with the too-much-moisture weather.

A fair amount of rains have also made the Russian wheat crop bigger, now estimated at somewhere between 66 and 68 million tonnes (almost 2.5 times last year’s Canadian wheat crop and 3 million above the U.S.D.A’s estimate in their July W.A.S.D.E report). Further, with investment in the sea port exportability increasing to 37.7 million tonnes (a 100 per cent increase in the past decade), Russia is sure to win the global title for top wheat exporter. The bigger question though is the quality though coming off in Europe, which is a similar question being asked here in Norther America. Accordingly, U.S. flour millers have been short-changed in the flour department by the low-protein winter wheat coming off in the Southern Plains this year. The premiums for better protein is starting to pick up so knowing the quality of your wheat you take off this year will be paramount. Go ahead and order your quality tests from our partner SGS on FarmLead.com ahead of combines rolling and be ready to put grain in sample bags as it’s going in the bin (not after!).

Given the available global supply, we may see these lower wheat prices though through harvest, a similar rhetoric likely to be seen in other crops if we don’t continue to get hammered with rains. With no other bullish demand stories showing up though, we’d take advantage and be a seller again of another smaller block of 10 of production if you were to see another short-term rally of 5-10 per cent higher.

To growth,

Brennan Turner

President & CEO | FarmLead.com

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 mobile grain marketplace (app available) that has moved almost 300,000 MT in the last 2.5 years. His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (b.turner@farmlead.com) or phone (1-855-332-7653).

 

Just Posted

Snow flies at Ponoka Legion’s Flags of Remembrance ceremony

Despite the chilly weather, 128 Maple Leaf flags were raised at Ponoka’s Centennial Park

Ponoka senior Broncs take second win of season

The Broncs defeated the Wetaskiwin Sabres at home

Young Ponoka barrel racer one to watch

Janae McDougall won Lakeland and Wildrose Rodeo Association peewee barrel racing

Ron Orr to return for another run as MLA

Lacombe-Ponoka UCP contest won by incumbent MLA

Wolf Creek Schools raises Treaty 6 flag for first time

Chiefs, school officials took part in a ceremony that is aimed at acknowledging Treaty 6 land

Video: Flyers new mascot ‘Gritty’ a bearded, googly-eyed terror

The Philadelphia Flyers unveiled their new mascot Monday, and as one would expect of the team that gave us the “Broad Street Bullies,” he’s far from cuddly.

Veterans Affairs ordered to take second look before supporting vets’ relatives

Liberal government ordered officials to adopt a more critical eye

Ottawa working to iron out kinks in public alert system

The alerts are being credit with saving lives during last week’s tornadoes

Assault charge withdrawn vs. ex-Jays pitcher Roberto Osuna

Former Toronto player agrees to peace bond

UPDATED: Bill Cosby gets 3-10 years in prison for sexual assault

Judge also declared the disgraced comedian a ‘sexually violent predator’

U.S. worker charged after video shows him spitting on customer’s pizza

Jaylon Kerley of Detroit is charged with a felony count of food law violations

Robbery report at outlet mall turns out to be fake: police

Leduc RCMP respond to weapons complaint at premium outlet collection mall

Canada aiming for the moon, and beyond, with new space technology efforts

With an eye on future lunar exploration, Canada’s space agency is calling on companies to present their ideas for everything from moon-rover power systems to innovative mineral prospecting techniques.

New Brunswick Premier meets with lieutenant-governor as Tories, Liberals vie for power

New Brunswick Premier Brian Gallant said the only other leader he had spoken with since results came in was Green Leader David Coon.

Most Read