Grain Marketing Insights

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Grain Marketing Insights is provided monthly by LeftField Commodity Research.

November 2021

FLAX UPDATE

  • Demand for Canadian flax has been strongest from the US, while exports to China and the EU are still quiet early in 2021/22.
  • Flax prices in North America are well above other markets and are rationing demand, as needed.
  • Yellow flax bids are continuing to climb sharply, pulling away from the record brown flax prices.
  • With average yields, a 10-12% increase in 2022 Canadian flax acres would allow supplies to rebuild to more typical levels.
  • Canadian flax exports in September were 12,000 tonnes, ahead of last September at 10,000 tonnes but lower than the 5-year average of 21,000 tonnes.
  • Chinese flax imports recovered to 32,000 tonnes in September, with Russia as the main supplier.

CORN UPDATE

  • USDA bumped the US corn yield to 177 bu/acre, but this was offset by bigger demand, so there was no build in stocks. The carryout is projected to be fairly balanced at an estimated 1.49 billion bushels.
  • US ethanol production is back to levels not seen since 2018.
  • Export volumes are expected to increase out of the major non-US global exporters (Ukraine, Brazil and Argentina). This increases global competition, possibly hurting US exports.
  • Chinese demand has been quiet recently, but their domestic corn prices remain high. Their imports going forward is an important factor to watch.
  • Prairie corn prices are staying at an unusually large premium to Northern US values even as import volumes have started to increase. High freight costs may keep the price spread historically wide.
  • Western Canadian corn remains relatively economical for feeders compared to barley and wheat.
  • High input costs are causing early concerns about 2022 acres.

BARLEY UPDATE

  • Despite a much smaller 2021 crop, Canadian barley exports so far in 2021/22 have been running ahead of last year’s exceptionally strong pace.
  • Canadian supplies simply aren’t large enough to maintain a heavy export pace and will need to slow sharply. Canadian barley is no longer price competitive.
  • Chinese barley imports were over 1.5 million tonnes in September but most of that came from the earlier harvests in Ukraine and France.
  • Malt barley premiums have shifted from low levels last year to unusually wide premiums of $2.50 per bushel or more, due to poorer quality and small quantities in the 2021 crop.
  • Large volumes of US corn are entering western Canada but haven’t weighed on barley prices yet.
  • Last year, US barley had been flowing north into Canada, but the American crop is much smaller this year and trade will be reduced.

SUNFLOWER UPDATE

  • Crop reports from Manitoba Ag suggest 2021 sunflower yields in the province could be well above the StatsCan estimate of 1,809 pounds per acre. The final StatsCan estimate will be issued Dec 3.
  • Sunflower crush in the US set a new record for 2020/21 at 650,000 tonnes and that strong demand has been supporting prices north of the border.
  • Canadian exports (mainly to the US) were a modest 2,000 tonnes in September, but prior to harvest is normally a slow time of year.
  • Bids for oil and black birdseed sunflowers in the US are continuing to rise even as the harvest moves into its late stages.
  • New-crop (2022) bids are already starting to show up in the US around US$0.25 per pound.
  • Global veg oil markets are remaining strong, providing spillover support for sunflower prices.

WHEAT UPDATE

  • The small crop has resulted in Canadian farmer non-durum wheat deliveries being over 1 million tonnes behind last year. But while volumes are down, they represent a larger portion of the total supply, which is now 25% delivered compared to a normal 18%. Farm stocks are rapidly dwindling.
  • Russia may add further export restrictions via quotas and/or how their export tax is computed. This creates additional uncertainty in one of the world’s largest exporters, pushing prices higher.
  • The combined Australian and Argentine wheat harvests may be record-large at over 51 million tonnes. These supplies are badly needed, making big Southern Hemisphere crops less bearish for markets than might normally be the case.
  • Short global stocks keep attention on winter wheat conditions, even if it’s too early to project yields.
  • Hard red spring wheat values out of Canada and the US are at a large premium in global markets, but markets are trending higher across nearly all major price points.
  • Prairie feed wheat prices remain very strong.

Grain Marketing Insights is not intended to provide marketing recommendations. Manitoba Crop Alliance and LeftField are not liable for any decisions made based on this information.

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