Welcome to The Weekly Harvest, where we recap this week’s hot topics in the crop market. Here is the recap for this week:

1. Statistics Canada Releases its Canadian Acreage Report Next Week

Statistics Canada’s (StatsCan) Canadian Principal Field Crop Areas comes out on Tuesday, April 27, 2021, at 7:30am CDT. 

Reuters recently ran a trade estimate poll for the upcoming report and canola and barley came out as the big winners. The trade’s average guess for canola is 22.6 million acres, up 8.7% year-on-year. FarmLink estimates canola at 21.9 million acres, just above the lowest trade estimate. The average trade guess forecasts barley acres increasing by 6% to 8 million acres. FarmLink’s barley estimate is higher at 8.35 million acres. The trade has wheat acres dropping by approximately 1.3 million acres and durum by 200,000 acres year-on-year.

The biggest question is whether the market will react to StatsCan’s numbers. At first glance, StatsCan’s canola seeding estimate is bearish – assuming normal weather and a trend yield scenario. Cold and dry weather could be a red herring as planting (without excessive moisture and flooding) usually gets done. The market may ease off as long as it doesn’t see perpetual alarming weather reports. Key weather remains ahead for all crops, but conditions in June through August will directly impact yield.

2. Canada Buys Canola 

In an unprecedented move, a Canadian grain trading entity purchased at least two 30 KMT cargoes of Ukrainian rapeseed (canola) for import in August. While this move is highly unusual given that Canada is the world’s largest canola producer and exporter, it shouldn’t be feared. Canadian canola stocks are exceptionally tight and will be at its lowest supply in August. It shows how robust Canadian exports and domestic demand have been this season, resulting in the need to fill the supply gap. Finally, Ukraine is due to harvest a smaller canola crop year-on-year, and any canola the Ukraine ships to Canada will be made up for by Canadian exports post-harvest. 

It’s important to note that Ukrainian canola prices have risen by $35/MT over the last week on fears related to bad crop conditions across the E.U. and a smaller domestic production outlook. The main takeaway for Canadian grain producers is a net positive. Canadian end-users need canola and given the tight supply situation, the 2021/22 production cycle is critical

3. Commodity Prices Stay Elevated as the Economy Recovers Post-Pandemic

According to Reuters, the World Bank projects global commodity prices will stay firm through 2021, buoyed by strong economic growth. All commodities ranging from energy to agriculture are forecast to see strong prices through the end of the calendar year. 

Agricultural markets trended higher in 2020/21 on strong Chinese demand coupled with crop production issues in key geographies. Agricultural markets are forecast to rise nearly 14% in 2021. However, the World Bank cautioned that the optimistic outlook would depend heavily on containing COVID-19 outbreaks worldwide. The World Bank went on to say the pandemic showed cracks in the global supply chains, along with an increasing number of countries facing food insecurity, reversing years of improvements. These issues are expected to continue through 2021 and into 2022. 

 

 

Source: FarmLink

Information contained herein is believed to be accurate but is not guaranteed by the parties providing it. Farm At Hand, FarmLink, and their information sources assume no responsibility or liability for any action taken as a result of any information or advice contained in these reports, and any action taken is solely at the liability and responsibility of the user.

 

 

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