The Good: There is no surprise that Canadian exports are lagging last year as the drought impacts the availability of export supplies. There is one commodity that is still ahead of last year’s pace and that is barley. Barley exports are 55,000 tonnes ahead of last year at this time with year to date exports hitting 962,400 tonnes. The problem with barley exports is that exports over 1.2 to 1.3 million tonnes (bulk) will drive ending stocks to extremely low levels. Given that there are 132,900 tonnes of barley in Vancouver and Prince Rupert at the end of October, exports of 1.1 million tonnes are already virtually assured. This is the reason that cash barley prices remain strong despite the influx of corn into the Western Canadian feed markets.
The Bad: Canola had a rough trading day today, but the settle for the January contract was down a modest C$4.80 per tonne at C$973.90 per tonne. The weakness in canola is not related to the global situation, but the pressure from soybeans and soybean products. Soybean oil was down 1.34 per cent to close at 58.78 U.S. cents. At the same time soybean futures were down 17.25 U.S. cents per bushel. The November USDA report is likely to be bearish with the market expecting an increase in both production and ending stocks. Be prepared for some more rocky days ahead in the canola market.
The Ugly: Spring wheat had another ugly day as the nearby December contract dropped by 7.5 cents per bushel to close at US$10.09 per bushel. The next stop for spring wheat is below the US$10 per bushel level if traders use technical analysis as a guide. As we said yesterday, spring wheat supplies are tight and the market sell off has no fundamental basis. The problem is that the market is trading more on the technicals until the fundamentals take control. Look for the USDA report to remind the market that spring wheat (and wheat in general) is in tight supply.