What's happening in the grain markets?
Winnipeg canola futures have trended steadily higher since about mid-January, trading at their highest levels in two months. Much of the recent futures price strength is tied to advances in Chicago soybeans and soymeal, though soyoil has been generally weaker.
The only thing that matters to (oilseed) price discovery is whether perception of crop size there is getting smaller or bigger.
Soybean and meal futures have support from dry weather concerns threatening soy crops in Argentina, though expectations for a large Brazilian crop has muted price strength to some degree. Momentum remains with market bulls as crop concerns in Argentina persist.
Argentine soy production can still slip further, so in the short term, the only thing that matters to price discovery is what happens with the current crop size.
On the feed grains, delivered bids for Canadian Prairie feed barley into southern Alberta feedlots are continuing to rise for spring movement. Lethbridge area April-May delivered barley is being contracted between $228 to $230 per tonne. United States corn prices are working higher despite large stocks held by American farmers. There's generally a firm overall tone for the North American feed complex.
While touring western Saskatchewan last week, I witnessed cash feed barley specials amounting to $4.25 per bushel. In some cases, feed barley is actually higher valued than malt barley.
Meanwhile, pulse growers are facing new questions on the Prairies these days as the current trade impasse with India forces many farmers to prepare for new market realities.
Canadian Prime Minister Justin Trudeau is in India from Feb. 17 to 23 where the subject of tariffs on Canadian pulse exports to that country is expected to be raised.
India imposed import restrictions last fall, which immediately put pressure on pulse-exporting nations around the globe, including Canada.
Yellow pea prices are starting to see some modest recovery from the initial knee-jerk sell-off from $8.50 per bushel down to $6, with many merchandisers going to “no bid.” But line company pricing advanced back to around $6.75 per bushel for Saskatchewan, and I have seen bids as high as $7.
Stepped-up buying from China is encouraging for the yellow pea market and, in time, the development of enhanced domestic processing initiatives here in Canada should help.
Nevertheless, after the big pea market sell-off, it seems the trade is trying to discover a new equilibrium pricing point. I suspect $7 to $7.50 per bushel may be the zone in the coming weeks and months.
Red lentils remain in a funk at 18 cents per pound and unfortunately, I don’t see any quick fix for this market. It's a price which is down from 20 to 25 cents earlier in the year. The carryover for red lentils is large and will keep upside price movement limited for now. If we look one to two years out, there is perhaps the prospect of reds clawing their way back up into the 25-cent zone, but that seems a long ways off for now.
Oilseed and feed grain markets are punching up into new price highs. Pulse markets continue to struggle but trade is starting move again.
Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call 204-654-4290 or visit www.pfcanada.com to find out more about his services.