Harvest is under way across the Prairies. At this time of year, I like to read the provincial crop reports to follow how harvest is progressing. Of the major crops, according to the reports I’m currently reading (it’s Sept. 5), harvest of winter wheat and fall rye is almost a wrap across the Prairies, followed by dry peas, barley, spring wheat, oats and canola, which has the least combined acres right now.
In Alberta, major crops are 18 per cent harvested, which is ahead of the five-year average at 13 per cent. Producers in Saskatchewan have taken 33 per cent of all crops off at the time of writing, which is ahead of the five-year average of 23 per cent. Completed harvest is 18 per cent in Manitoba, which is slightly behind the five-year average of 23 per cent.
These detailed crop reports, which include regional moisture conditions, crop conditions, crop damage and percentages of all crops harvested, can be found by Googling the province and “crop report” (for example, Manitoba crop report).
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Already, farmers are focusing on marketing their crops. I checked in with Bruce Burnett, the director of markets and weather information for Glacier FarmMedia, at the beginning of September for an update on what the spring wheat and canola markets are doing and what he anticipates the weather will bring over the next few months.
Over the past month or two, you’ll have noticed that wheat and oilseed markets have gone in very different directions. On Aug. 29, Statistics Canada released its latest production estimates putting canola at 17.56 million tonnes, down from last year’s 18.69 million tonnes, giving support to canola mar- kets. Burnett stressed the importance of paying attention to the release of the next StatCan production report in September and some of the fundamentals for world oilseed markets.
“The U.S. soybean crop looks like it’s going to have a dry, hot finish – that’s the current forecast… In terms of future marketing plans, keep a close eye on those production levels because even now the USDA is forecasting some very tight soybean ending stocks, and that’s going to influence canola prices.
“What I think specifically for farmers to be aware of is vegetable oil prices and how they are moving relative to other commodities. Vegetable oil prices have been relatively strong here and it’s certainly one of the things supporting canola values this year, right now,” says Burnett.
Locally, expect bids to be the strongest from domestic pressures and elevator bids to be more volatile.
“Export sales are going to be more lumpy, I guess you would say, in terms of what demand is at your local elevator for export canola. It’s something to keep a close eye on… Your local elevator basis will improve dramatically compared to what you’ve been seeing for maybe a month or two but, basically, that’s what you need to keep a very close eye on in the fall,” says Burnett.
Probably you’ve already sold some canola for new crop, but if you haven’t, Burnett says you should consider it after the reasonably good rally.
“Look at making sales here above this $800 level. I think we remain fundamentally early bullish for canola or at least this calendar year, so there will be opportunities.”
If it’s cash flow you need, you probably need to get some canola marketed.
And wheat markets have gone in the opposite direction. However, you would expect to see this weakness in wheat as it is traditionally a poor month for wheat prices as the harvest of the world wheat crop is during the July, August and September time frame.
However, there are seasonal tendencies for prices to improve.
“After our harvest is done, or mid-harvest for us in September, October and early November, I would hesitate to make sales right now. Again, we would assume you’ve marketed some, but we’d wait over the next couple of months to see how the situation evolves,” says Burnett.
He recommends farmers keep an eye on September’s StatCan wheat production estimate. Also, watch what’s happening internationally, particularly the Australian crop, which is being hurt by El Niño.
“(Australia) and Argentina are the last major exporters to harvest a crop. The Argentinian crop looks good. I think you would assume that they’re going to have more supplies, but the Australian production is certainly going to be lower than last year and possibly a lot lower, so it’s something to keep a very, very close eye on.”
Demand is another important factor. Demand has been relatively strong to date but should pick up in September and October.
Weather is going to be a mixed bag, says Burnett. Expect a number of systems to move through the Prairies that could create harvest delays. After that, we’re probably going to see a drier trend develop.
“Temperatures in the eastern Prairies are probably going to be warmer than the western Prairies through the month of September. There are some indications that October could be a lot cooler in terms of the average. So that would be something to keep a close eye on again if we got into a late harvest season.
“When we get into November, then we’re going to be, probably, under a big influence in terms of El Niño. That usually gives us some warmer, drier weather during the winter, especially in the southern and western areas of the Prairies.”
Of course, we all know there are no guarantees as to what the markets or Mother Nature will do. Count on your own instincts and a business plan that factors in these uncertainties while you stretch toward your long-term goals.
Have a safe and happy harvest, Kari
