What will come from G20 summit?
With most crops harvested in the Northern Hemisphere and the mounting trade uncertainty from the U.S. and China conflict leading to changing export patterns, this weekend's G20 summit in Buenos Aires has the market's undivided attention. During the week, commodity markets found some support as buyers are stepping in and hedging in case a deal is reached between Presidents Trump and Xi Jinping. There is not a clear indicator that any agreement will be reached, and the U.S. could go ahead with implementing tariffs on Chinese goods. This would be bearish for commodity prices on Monday. But if any agreement is reached, look for support to come back to the market in a hurry. Longer term, look for the outcome of the weekend to shape not only exports, but planting decisions for 2019.
Wheat markets started the week on a firmer note as a purchase of U.S. wheat was made by Egypt. Support carried through on cold weather in the U.S. and buyers stepping in ahead of the G20 summit. Export sales continue to lag and the value of the dollar is keeping buyers at bay. Other sources of wheat remain favorable to the U.S. Even with the looming conflict in Ukraine at the hands of Russia, exports in the Black Sea region continue to flow. Do not expect any significant move for wheat without a pull (in either direction) from corn, as supplies are known and conditions are decent in most places heading into the winter dormancy period.
Durum prices continue to be depressed with little movement over the last few months. With decent supplies heading into winter, one would not expect much volatility until spring weather and planting decisions become market knowledge. In Canada, much of the durum available is being sold as feed wheat as export prices are not attractive to farmers.
Canola markets pushed to a new low this week before finding some support and bouncing off the low ahead of the weekend's G20 summit meeting. Prices followed the trend of the soybean oil market. Supplies are quite large and looming uncertainty of the trade war with China are keeping a lid on the market. Palm oil supplies are also huge. Adding to pressure for canola (and other fats) was the ongoing pressure on crude oil prices.
Peas and lentilsLittle to drive prices of pulses lately. Some support is coming as export demand is picking up for Canadian lentils. And the U.S. issued a tender for food aid surpassing four thousand metric tons, with 800 metric tons being purchased this week.
Mustard seed prices have been weaker over the last few weeks. Supplies are good on a good crop coming from greater area than a year ago. According to insurance data compiled by the Canadian Grains Commission, farmers in Western Canada planted about 24 percent more area to mustard seed, while Statistics Canada showed seeded area was up 30 percent overall.
There has not been much news for domestic barley markets, but attention has been going to China — and, for once, not because of a trade war with the U.S. China has filed a complaint with the World Trade Organization against Australia for dumping barely on its market at an unrealistic low price. There have not been any counteracting duties placed on Australian barley at this point, but look for some potential opportunity for export of barley from Canada if a resolution is not found.