A lot to digest from U.S. and Canadian acreage and stocks reports
Both Statistics Canada and the U.S. Department of Agriculture released major reports on June 29. Planted acreage for the 2018 crops as well as U.S. quarterly grain stocks have been the market's focus all week. Individually, there is a lot of information to shape the supply and demand fundamentals for each crop. However, the overall tone of the reports show that estimates ahead of release were generally pretty close to the actual data. As a result, the market was quick to shift focus back to weather and expected output this fall.
Wheat markets ended the week higher, but are still well below the highs on Chicago and Kansas City contracts. Spring wheat prices, however, keep falling on good crop conditions. In the U.S., total wheat planted area was reported at 47.8 million acres (up 0.7 million acres from the pre-report estimates). This is a 0.5 million acre increase from 2017. Quarterly stocks were as expected. U.S. winter wheat harvest continues, with the USDA reporting 41 percent completion compared to 33 percent for the five-year average pace.
Spring wheat crop ratings dropped modestly to 77 percent good to excellent from 78 percent a week ago. This is still much better than last year's disastrous crop when ratings were 40 percent good to excellent during the same week. Total Canadian wheat area (as reported by Statistics Canada) was reported at 24.7 million acres. This is a 10.4 percent increase over planted area for 2017.
The durum market remains quiet. Canadian durum planted area is 18.8 percent above a year ago, totaling 6.2 million acres. This is well above the trade estimated 5.7 million acres and the April report of 5.8 million acres. The North Dakota crop remains in very good shape with the USDA reporting 77 percent rated good to excellent.
Canola prices have been choppy, wanting to follow the U.S. soybean oil market lower but resisting on expectations of good demand from China. On the bearish side, weather has been mostly favorable and there is some demand concern with the U.S. Statistics Canada reporting total seedings at 22.7 million acres, which is a 1.1 percent decline from last year's 23.0 million acres. This reduction was smaller than initially expected (the trade estimates averaged 22.4 million acres) however, and the market will view this report as bearish.
Peas and lentils
Statistics Canada reported a drop from a year ago in planted acreage for the 2018-19 crop. Farmers reported total area for lentils at 3.8 million acres and 3.6 million acres for dry peas. These are annual reductions of 14.5 percent and 12.0 percent for lentils and peas, respectively. The lower planted area is not a huge surprise to the market, given the increased protectionism of the Indian government which has put tariffs on a variety of pulse imports over the last several months.
Canadian mustard seed crops have been holding steady. Traders are focused on the weather conditions impacting the crop, with some areas needing rain while others are in good shape heading into the usually hotter/drier portion of the summer.
The U.S. barley crop maintains very good ratings with 83 percent of the crop good to excellent. Canadian barley planted area is up 12.7 percent from a year ago, totaling 6.5 million acres.