Glacier FarmMedia COVID-19 & the Farm



Market Reports

AM Market Report – September 16, 2020


1. Alone together
2. Small crowd
3. Soft rock
4. Butt Head
5. Sweet sorrow
6. Passive aggression
7. Clearly misunderstood
8. Peace force
9. Terribly pleased
10. Computer security
11. Political science
12. Definite maybe
13. Rap music
14. Working vacation



ICE canola futures are trading less than $1/tonne lower for the most part this morning…continuing yesterday’s mild correction lower off a late summer run-up to 2+ year highs. Chicago soybean futures are trading high-range and up 5 to 6 cents/bu after two-sided overnight action. Bean futures are bouncing back from yesterday’s slippage following data showing lower soy processing in the United States and forecasts of crop-friendly harvest weather in the Midwest.

Corn futures faced pressure overnight and is down fractionally to a penny this morning, though is trading off its session lows. Bit of a mixed tone for US wheat markets…winter wheats around 1 to 3 cents lower, while HRS wheat is fractional mixed.

In Other News

– Manitoba harvest presses onward… The Manitoba harvest picked up the pace, according to the latest weekly crop report from Manitoba Agriculture. The overall harvest reached 56% complete, seven points back of the three-year average.

Among the spring cereals, barley was furthest along at 92% combined, with wheat at 82% done and oats at 81%. Wheat yields varied widely from 55 to 100 bu/acre. The harvest of winter cereals was finished, and some planting was starting. The corn harvest had yet to start in Manitoba.

Of the oilseeds, canola was 54% harvested and flax was at five. The combining of sunflowers had yet to begin. There were reports of canola yields being disappointing due to heat blast and Verticillum wilt. Frost damage from last week had yet to be accounted for. Canola yields were from as little as 10 bu/acre to as much as 80, depending on the region.

Field peas were finished for the pulses, while dry beans reached 12% completed and soybeans at two. Yields for late-planted soybeans are expected to decline.

– FCC suggests modest increase in farmland values for 2020… Average farmland values in Canada are once again showing modest increases for the first half of 2020, although the full impact of the Covid-19 pandemic has yet to be weighed, according to a review by Farm Credit Canada (FCC). Low interest rates, the limited supply of farmland in the market and confidence among producers in the farmland market appear to be the main drivers behind the 2020 mid-year increase.

The national average for farmland values increased an average of 3.7% for the first half this year. This increase is in line with mid-year results over the past five years, which showed single-digit increases for the full year. FCC’s review showed lower 12-month increases in average farmland values for most provinces over the last 12 months compared to last year’s average, with the exception being in Alberta (8.5% compared to 3.3%) and Saskatchewan (7.9% compared to 6.2%). In general, the pace of farmland value increases over the past six months was slightly higher in western provinces and slightly lower in central and eastern parts of the country.

– Lentils See 173% Spike In Alberta… MarketsFarm reporter Glen Hallick writes that a bright spot for Alberta agriculture in 2020 has been the province’s lentil crop. The amount of the pulse grown this year skyrocketed by more than 173% than compared to 2019, according to Statistics Canada. Lentil production in Alberta is set to hit a record 458,124 tonnes this year. In 2019, the province produced 167,600 tonnes. The previous record was in 2016, when 451,800 tonnes of lentils were grown.

“Price is number one (explaining the huge increase). When the Covid-19 pandemic hit and the world wanted protein, they came after lentils and all of a sudden lentils from the countryside were being shipped,” said Don Shepert, the chair of the Alberta Pulse Growers…noting that prices jumped from about 15 cents/lbs to 30 and upwards to 35 in some cases.

There really hasn’t been one type of lentil that stands out this year compared to other varieties, although red lentils are easier to grow and tend to have better yields than green lentils, he commented. With those differences, one benefit for green lentils is they often come with a price premium. “It seems to be a preference of the grower,” Shepert said, adding that on the whole lentils use up less water than other crops, making it a good crop for farmers in eastern and southern Alberta.

StatCan has forecast total Canadian lentil production to come to 3.065 MMT this year, the second most on record and up 36.7% from 2019.

– China suspends poultry imports from second US plant over Covid-19… China has suspended imports from an OK Foods poultry plant in Fort Smith, Arkansas, because of coronavirus cases among workers, the USA Poultry & Egg Export Council said on Tuesday. China, the world’s top meat importer, has blocked products from some plants in foreign countries as part of an all-out effort to control the spread of Covid-19. “We don’t think that either one of these two are justified, especially considering the fact that the virus cannot be transmitted in poultry meat,” said Jim Sumner, president of the USA Poultry & Egg Export Council.

– Drought has created the worst conditions for winter grain sowing in 10 years for Ukraine… The consultancy APK Inform says weather conditions for sowing of winter grain are the worst in the past decade due to severe drought across most of Ukraine. The consultancy says, “As of Sept. 10…the area with absolutely dry and almost dry arable soil layer increased up to 60%-70% (of the total area). At the same time, the soil layer 0-10 cm was almost dry on 70%-80% of the area.” As a result, APK Inform says “mass winter crop sowing in areas with such a low moisture is impractical.” Light rains forecast later this week are only expected to moisten the topsoil.

– Forecasts of heavy rains raise fear for summer crops in India… Forecasts of heavy rains across key central and western growing regions of India have stoked fears of potential crop losses in the second half of September, farm experts and industry officials said. Last week, the state-run weather office said the monsoon, which turned patchy in the first week of September, will pick up in most parts of India, with rains expected in some of the key farm belts

– US presidential candidate Biden rips Trump’s record on ethanol… US Democratic presidential nominee Joe Biden late on Tuesday attacked President Donald Trump’s record on ethanol, saying his administration’s recent moves to help the industry were too little, too late and transparently political. Biden said in an exclusive statement to Reuters that the Trump administration’s announcement this week that it would reject requests from oil refiners for retroactive waivers exempting them from biofuel blending laws was not enough to outweigh several years of granting large numbers of such waivers, which biofuel producers say erode demand for their products.

– More cases of ASF in eastern Germany… Another five cases of African swine fever have been found in wild boars in the eastern German state of Brandenburg, the state government reported today, citing initial test results. These latest cases were in close proximity to the first official confirmation of the virus last week. China, South Korea and Japan have all banned imports of pork from the country in response.

Outside Markets

The Dow Jones Industrial Average edged a very modest 2.27 points higher on Tuesday to 27,995.60. Early Wednesday, December Dow Jones futures are up 43 points.

Stocks index futures are slightly higher so far this morning. But investors are generally cautious before the US Federal Reserve meeting today, with the rally that pushed up shares after Chinese and US economic data in the previous session slowed in early London trading. Risk appetite is somewhat limited ahead of the US Federal Reserve’s policy meeting, and its statement later today.

The Fed is not expected to make changes to its US monetary policy at the meeting, which will be its first since it announced that it would pursue average inflation targeting. Although the economic projections are expected to be somewhat improved from the last round of forecasts in June, Fed Chair Jerome Powell is expected to stick to his message that the road to recovery will be long and uncertain.

Investors will also be watching for US retail sales data, due today, which is expected to show a robust increase.

Elsewhere, the World Trade Organization ruled that the United States had breached global trade rules with the multibillion-dollar tariffs it imposed during its trade war with China. The Trump administration is basically ignoring the ruling and is inclined to just carry on with its tariff leveling ways in any manner it chooses. So much for the rule of law in America. The decision has had limited market impact so far, as it is only the start of a legal process that could take years.

In other news…The Organization for Economic Cooperation and Development (OECD) today said it expects the global economy will shrink less than previously anticipated this year thanks largely to the “massive” intervention by governments to shore up their economies. However, it’s predictably warning that the actual outcomes will depend on how the pandemic plays out…and says its call for 5.0% global growth next year could be cut by 2-3 percentage points if the virus flares up. In a message that will resonate in Canada ahead of next week’s throne speech, OECD Chief Economist Laurence Boone cautioned, “it is important that governments avoid the mistake of tightening fiscal policy too quickly.”

The December US Dollar Index is down 0.205 at 92.880.

October crude oil futures are up $0.95 at US $39.23/barrel.

Grain Markets

Chicago soybean futures are bouncing back so far this morning…currently trading 5 to 6 cents/bu higher. Yesterday, futures closed with losses of as much as 8 cents. Soyoil futures are up 9 to 11 points after losing 14 to 17 points yesterday.

The fate of the soybean market rests largely on how strong China buying continues…so far it has been gangbusters strong with no signs of letting up yet. The US now has at least 1.18 billion bu of soybean sales on the books for 2020-21, over half of which are attributed to China. USDA has trimmed its estimate of 2020-21 US bean stocks to a still somewhat comfortable 460 million bu, but there is not a lot of room for any more bullish surprises.

Next up…the start of soy planting season in South America amid dryness concerns already, with an old crop supply cupboard already empty. The trade is expecting a record large crop from South America…and it is needed. But if there is a shortfall, it could create some explosive market potential. But that’s a big “what if” variable for now.

There was some disappointment yesterday over US soy crush totals in August at 165.055 million bu as reported by the US National Oilseed Processors Association (NOPA)…below trade expectations of 169 million.

Chartwise… charts continue to point higher for the soybean market. There was some flirtation with bearish reversals yesterday, but futures are bouncing back nicely this morning…Nov contract up 6.25 cents at $9.98/bu right now.

Chicago corn futures are fractionally to a penny weaker this morning. Front month corn futures closed 3 cents lower on Tuesday…pulling back from Monday’s posting of a new 5-month high.

The trade has now come to terms with US crop size of around 14.9 billion bu and smaller (though still quite comfortable) 2020-21 US corn ending stocks of 2.5 billion bu…not much here US supply-wise to drive futures higher. Bullish enthusiasm then needs to come from the demand side of the ledger…and that is where the China factor is at work.

China’s corn purchases from the US, including new sales announced Monday and Tuesday, now total 9.3 MMT for new crop. There is another 2.2 MMT listed under Unknown, the majority of which are likely China. This brings the “potential” purchases to 11.6 MMT. Incredible levels of buying to start the new crop marketing year. What level of buying comes from here onwards will play a key role in moving the corn market up or down.

Sky-high domestic corn prices in China suggest buying will continue, but that is hard to conclusively assess. There are also reports the recent string of typhoons hitting the mainland has damaged crops in northeastern China.

Chartwise… the price in corn remains up, but upside potential may be limited with the US harvest drawing near. The trade will be watching US yield numbers closely following the drought or near drought conditions and derecho during August.

US wheat markets…still the dog of the overall grain/oilseed complex…are leaning slightly weaker this morning. Winter wheats are 1 to 3 cents lower, while spring wheats are fractionally mixed, though leaning weaker. Tuesday left front month wheat futures in the red…SRW down 6 to 7, HRW 3 to 5 cents lower and Minneapolis spring wheat futures were 3 to 6 cents lower. It seems there are plenty of wheat export tenders floating around but it is not doing much for prices.

Chartwise…after rallying in August off its contract low to test up to its 200-day moving average near $5.50/bu, the Minnie Dec spring wheat has been on a steady decline in September. The contract has dropped back below its 20-, 50- and 100-day averages and the MACD indicator has posted a bearish crossover as the Dec has now retreated down to $5.24/bu.

Seasonally, we are entering the time of year when the emphasis on Northern Hemisphere production transition into winter demand prospects…resulting in a bump of some kind for wheat markets. So far though, nothing to get excited about as market sentiment remains entrenched that world wheat supply is abundant.


ICE canola futures slid around $2/tonne lower on Tuesday, retreating from nearby highs as overbought price sentiment had speculators booking profits. Losses in Chicago soy complex futures and most other agricultural commodities
also weighed on canola values. Seasonal harvest pressure was another bearish influence on the market.

However, solid end user demand provided some underlying support.

For today… canola futures are trading near $1/tonne lower this morning, attracting a cautious level of long profit-taking from the spec fund crowd. Undoubtedly, the recent month of price rally to a 2-year high is drawing increased farmer cash selling as well.

Chartwise…some bearish reversal action over the past 1-2 days, but no major technical damage. Nov canola is only a modest $0.30 lower this morning at $520.60/tonne…just $3 off Monday’s closing high for the move. But this surprising spike gain going into the harvest season is approaching some major, multi-year resistance levels…let’s call it firstly around $525 when you draw a line on the monthly canola chart off the early 2008 high (yeah, I said 2008). Then there is the $530-$540/t area which has been tested and failed on a few occasions over the past 5 years…more notably in the period 2015-2018.

There is reason certainly to be optimistic on the canola price outlook in what appears to be a demand-driven bull market…with vegoil markets leading. But if being honest, it would feel irresponsible on my part not to be suggesting scaling in cash sales to reward this rally. MarketsFarm wants to be 40% sold on 2020 canola production…and may yet do more soon…maybe.

Prairie Weather Watch

MarketsFarm weather specialist Bruce Burnett says yesterday was a cool one across the Prairies with temperatures mostly in the low to mid teens across the region. There were some temperatures above the 20C mark close to the U.S. border, but these areas were few and far between. Today should see a warm up in Alberta and western Saskatchewan, with daily highs hitting the mid to upper teens. Eastern regions should see temperatures remain in the low teens for today, but the warmer temperatures will push into the region by tomorrow and Friday. Temperatures on Friday and Saturday will push into the 20s across the Prairies as a low pressure system tracks across the southern and central Prairies.

The Prairies are expected to be mostly dry over the remainder of the week before chances of rain increase on the weekend. A low pressure system is expected to move into southern Alberta on Saturday and track to the northeast before exiting northeastern Saskatchewan on Sunday. The amounts are mostly going to be light from the system, but portions of southern Alberta and northwestern Saskatchewan are expected to receive over 25 mm. The longer term precipitation outlook is currently relatively dry for next week.