From FCC Express
By Richard Kamchen
G3 Canada recently projected lower crop returns, and analysts agree price outlooks are gloomy for farmers.
Compared to its last Pool Return Outlook released in June, returns for G3 Canada’s 2016-17 Early Delivery and Annual pools are down $8 to $12 per tonne for wheat, and $10 a tonne lower for durum.
Canola is $27 to $30 a tonne lower, soybeans down $37 a tonne, and field peas down $68 to $72 a tonne.
Very high yields observed during the United States winter wheat harvest and another month of development in spring seeded U.S. and Canadian wheat crops have weighed on G3’s wheat outlook.
“The supply has become more certain,” says Dave Simonot, manager of pooling.
For durum, G3 Canada says its predicted lower returns reflect weaker export values, which are being somewhat offset by the weaker Canadian dollar.
Big crops in western Canada and North Dakota are bearish as well.
“If we see excellent quality, I would say there’s a chance those durum values will come down further,” Simonot says.
The promise of a bumper canola crop pressured that crop’s prices lower, Simonot says. He adds that ongoing uncertainty about Chinese demand also hangs over the market.
One bright spot could be strong overall canola usage.
“With only a likely 950,000 tonne carry-out from last year, we almost need a 19 million tonne crop to maintain bare minimum supplies,” says Ken Ball, senior commodity futures advisor with PI Financial Corp.
Canola at some point may have to become more expensive relative to other oilseeds to ration demand, he adds.
Looming heavy supplies are also bearish for soybeans.
“The U.S. crop is looking excellent, and that’s taken the soybean values down,” Simonot says.
“U.S. corn and soybean crops are looking record large, and we are rapidly creeping into the final crop stages,” Ball says. “It will be a tough year to get any decent and lasting price rallies underway.”
Peas plummeted in value, a common occurrence when demand for them is filled, Simonot explains.
Peas may bump
Large Canadian supplies are also pressuring values down, but Kevin Price, a senior trader at Agrocorp Canada, adds peas could potentially experience a brief bump in prices.
“First new crop pea vessel arrives next week; the anticipation before was for an earlier crop and the majors sold that way, so we may see them pump basis to capture early harvested peas to fill these early vessels,” Price says.