The Good: The USDA sales report today had soybean sales totalling 570,100 tonnes in old crop position and 2.839 million tonnes of new crop sales. The new crop sales pushed the total sales for new crop position to 17.98 million tonnes with only three weeks left in the marketing year. For old crop positions, 6.4 million tonnes of old crop sales remain on the books. With three weeks left until the new crop begins, it is likely that at least three million tonnes of old crop sales will move into the new crop. This would put new crop sales in 2020-21 at the highest level on record. The other years with large new crop bookings were 2o13 and 2014, but in those years, less than two million pushed into new crop positions. Anyway you slice it, U.S. new crop soybean demand this year has been exceptional. And that is good for canola!
The Bad: Australian crop production is expected to rebound this year as rains have finally returned to the country. This will provide significant competition for Canadian grains and oilseeds in the second half of the marketing year. As if that wasn’t bad enough news, the Australian dollar is now moving lower versus the Canadian dollar. The loonie and the Aussie dollar trend to trade close to par because both economies are dependent on trade and have similarly sized economies. The stronger Canadian dollar has put Canadian farmers at a disadvantage when compared to their Australian counterparts.
The Ugly: For most farmers, the price of natural gas or propane is the important input cost for drying grain. Usually prices during the summer are low and don’t begin to rise until September. This year, gas prices have risen as we head into August because supplies are beginning to tighten. There are many reasons for this, but primarily it is related to the drop in oil production in the U.S. which has shut off supplies of sale gas. The markets are not concerned about tight supplies in the fall, but are worried that sufficient supplies will be available for winter. Hopefully the dry weather forecast for next week will stretch through September!