Hot and dry weather across a large part of the Prairies advanced crops and brought harvest on ahead of schedule. Yields are variable, but the expectation is that we will end up with an average crop, based on 10-year average yields.
Early reports of high protein up to 17 per cent in wheat has already prompted grain companies to adjust and narrow protein spreads with many of them only paying a premium up to 14 per cent.
If you end up with higher or lower protein wheat, you may want to check around to find an area that has protein levels opposite of yours, to see if you may be able to get a little more for blending.
There have been talks between the U.S. and China, but no formal agreement has been reached that would defuse the current trade war between the two.
With the U.S. poised to harvest a bumper crop this is bad news for U.S. bean farmers. Futures values are being pushed lower because their No. 1 customer who buys approximately 60 per cent of U.S. bean exports, worth over US$12 billion annually, is not buying beans, and may not be for some time.
If this drags on, it could have a bigger impact next spring when producers are deciding what to seed. A major shift from beans to corn or wheat could have a negative impact on prices for these crops.
India’s pulse tariffs
On August 29, it was announced that the Indian government had withdrawn the import quota amendment it had in place on pulse crops coming in to the country. The 50 per cent tariff still remained in place.
The next day, they announced that the tariff was reinstated until the end of September 2018.
I heard there had been a legal challenge to the placement of the quota amendment and they needed to do a re-wording of the document for it to be legal. They pulled it for the day to reword it, then reinstated the document the next day.
There is no end in sight to the pulse tariffs at this time, and with Russia dominating the pea export market because of their surplus supply, I don’t expect we will see any improvement in pulse prices for quite some time.
U.S. crop tour
The most recent U.S. crop tours over the past month have come back with higher-than-average anticipated yields for corn and beans.
DTN just completed its first Digital Yield Tour, which is based on state-of-the-art broad remote sensing technology. The yields from this report are a little lower than the traditional from the field yield tours that took place earlier. It will be interesting to see how these estimates compare after harvest is done. A bumper bean crop with China not buying will not help futures values. This will keep pressure on canola values as well.
Russia dominating export markets
With last year’s bumper crops and this year’s crops looking to be close to the same, Russia has taken control of the world wheat export markets, selling aggressively into key world wheat markets. Russian wheat export numbers are up 70 per cent over last year.
Russia also has a large volume of peas, and continues to dominate with exports into the key importing regions. The more Russia has to sell, the longer they can stay in the market and control pricing. This makes it very hard to sell Canadian grain into those markets at a price that is more profitable for Prairie producers.
The Canadian economy
Our economy has been performing better than expected which will likely mean another interest rate hike before the end of the year. The Canadian dollar has been on the rise due to the economic upswing and this will have an impact on producers, be it positive from a buying power perspective or negative from a currency conversion or grain pricing perspective.
Many factors influence your bottom line. These are but a few of them.