Pulse Canola report Au

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Pulse Canola report Au

Apr 15, 2018 | 15:33 1 Pulse markets continue to trade on an anxious note in the face of "strong rumours" India is considering a ban on pulse imports. The rumour stemmed from a recent meeting between a group of do-mestic pulse processors and Indian Politicians. Whilst explaining the meeting to Indian media, the group's leader, Suresh Aggarwal, said "We have huge stock of pulses with the government as well as the traders in the country. If we continue to import pulses, it will be difficult for farmers to get MSP (minimum support price)." Last year's imposition of a 50% import duty on peas, 30% on lentils, and 60% on both desi and Kabuli chickpeas has already had a chilling effect on trade. However, last year's import volumes strongly suggest importers and millers accumulated stocks in an-ticipation of the import duties. However, domestic markets have not responded, resulting in bids to farmers remaining below the minimum support price for most pulses. The implication is that some companies which accumulated stocks in the belief prices would jump after import duties were imposed, now regret building a speculative long position. It is not hard to imagine them trying to push the government into a decision which might have a bullish impact on India's domestic markets.
Peas- China again bodes as a major consumer of global produce and in particular, peas when talking about pulses. Market partici-pants at the recent agriculture outlook conference in Chongqing, China, suggested the country's import demand for pulses will ap-proach 1.4 million MT in the 2018 calendar year. More important-ly, they believe demand will continue to grow. Their optimism about demand for pulse protein, starch and fibre fractions is matched by investors in Canada and the United States, which are also seeing several new plants come on stream. While not offset-ting the loss of demand from India, it demonstrates the fact that all the markets for peas have yet to be discovered. Pea prices in the short term remain under pressure with the Indian duties in place. The past week has seen some improvement in track pea bids pushing $310 Port Adelaide. This has closed the gap between track and delivered markets to only $5-10, its tightest in some time. Delivered bids will need to improve to find supply, but the numbers for container freight peas aren’t quite enough to prompt bid increases and thus grower selling at this point. Sadly, there are no signs to suggest this will turn around anytime soon although, due to feed values and lack of liquidity the price shouldn’t be ex-pected to drop dramatically.
Chickpeas- Some market participants were dismayed by the USDA's seeding intentions report, believing land in the crop would see a dramatic increase this year. Instead, farmers say they intend to plant a record 665,000 acres of all classes of chickpeas in the Unit-ed States, up 7% from last year, but well below some trade esti-mates. Small chickpea intentions, at 185,500 acres, are 3% above 2017, while large chickpeas, at 479,500 acres, are expected to increase 9% from the previous year. A return to average yields would see production jump from 315,600 metric tons (MT) to just over 441,000, leaving the United States with a substantial exporta-ble surplus.
If exports climb from this season's estimated 185,600 MT to around 229,000 in the coming marketing year, residual supplies of chickpeas would be expected to soar from 20,000 to 103,000 MT or roughly enough product to cover three months of demand. With India imposing a 60% import duty on both desi and Kabuli chick-peas, imports are expected to drop sharply, suggesting there should be more competition for available demand in other destinations.
Prospective increases in North American output are following bigger Kabuli chickpea harvests in both India and Mexico. Improved sup-plies have already resulted in a general decline in world trading levels as we have seen locally since December highs. Prices have been stable the past fortnight with quiet trade. Most growers are relatively well sold on chickpeas which is favourable as production and acres look to expand this year.
Lentils- International lentil markets finished the week's trading mainly unchanged, helped by confirmation that farmers in North America intend to reduce seeded area this year. The USDA seeding intentions report said growers in the United States intend to reduce land in lentils 28% from 1.1 million to 791,000 acres. Reductions reflect a steep decline in prospective export demand and grower dissatisfaction with income levels from the crop. Although average green lentil bids are up three cents per pound in the Pacific North-west, they are down almost six cents from the previous marketing year in North Dakota and Montana. Combined with lower average yields because of last year's drought, gross income levels in the main producing regions have fallen sharply.
Farmers in Canada are also expected to reduce land in lentils. Sta-tistics Canada will release its seeding intentions report at the end of April, but markets generally believe area will be down at least 25% at 3.3 million acres, with nearly all of the drop accounted for by red. De-spite the intended 28% drop in plant-ings, a return to average yields in the United States would see production climb from around 340,000 to 378,600 metric tons (MT). By con-trast, Canadian output could drop from 2.55 to 2.18 million MT, for a net reduction in North American out-put. Continued Overleaf Reply With Quote
Apr 15, 2018 | 15:34 2 Nearly all the U.S. crop is green lentils, while Canada grows more red than green. Canadian red lentil production is expected to drop from 1.84 to 1.46 million MT, but green could be unchanged at 712,000. The net result is the North American green lentil harvest could inch upward from 1.05 million to 1.09 million MT. Markets have long expected the green lentil premium over red to shrink to more normal levels. So far this marketing year, Canadian farmers have been paid an average of CDN 14.9 cents per pound more for No 2 Canada large green lentils than for No 2 grade red. During the previous five years, growers saw a 6.7 cent per pound premi-um for large green. Current bids for new crop lentils reflect a shift, with growers only seeing an average premium 5.76 cents per pound for large green over red. At the same time, new crop large green lentils bids are discounted 3.6 cents per pound to spot.
Lower average prices for lentils for shipment after July than before suggest exporters expect more intense competition for available demand. On the other hand, an inverted market should discourage buyers from accumulating stocks in the April through June ship-ping periods. It makes more sense to buy on an as needed basis and/or clear current inventories and wait for the harvest. One im-pact of the current price structure and its effect on trading deci-sions is that it may result in greater price volatility during the Cana-dian growing season.
Forecasts of colder than normal temperatures are a concern across western Canada because of the risk it will delay seeding and slow germination. Studies have shown that the earlier crops can be sown and germinate the higher the yield potential. At the same time, forecasters think western Canada expect conditions to become hotter and drier than normal as summer approaches. That kind of weather is generally good from a quality perspective, but the combination of delayed seeding followed by hotter and drier conditions raises the risk of lower average yields. As export-ers and processors begin to doubt the yield potential of the Cana-dian crop, prices would be expected to inch upward. But there is
no reason to believe buyers will respond by covering new crop needs, preferring instead to wait for the harvest. The prospect is for a weather driven market through July followed by a demand driven market.
Closer to home, nipper demand remains stronger than for its Jumbo and Nugget counterparts. Overall lentil prices were much un-changed this week with bids around $480/$450 Adelaide equiva-lent for nippers and nuggets respectively. Nugget/Jumbo demand remains lacklustre in comparison due to a drop in Sri Lankan and Pakistani demand this season. The reason for the decline in de-mand is based on a range of factors but primarily it boils down to this; Consecutive years of decent lentil production and strong im-ports have led to building stocks in the sub-continent and exporting nations in Canada and Australia. Due to this, overseas buyers are in no hurry to accumulate stocks with most holding the view that there is little upside in the market, thus no reason to buy ahead of time. We are seeing more ‘hand to mouth’ trading this year than the pre-vious few.
Outlook –Lentils- Little upside remains in the sort term for lentils and the potential for further Indian duties looms. Tight grower li-quidity throughout May should provide some short term stability to the market providing there is no market shocks. Look to continue sales around $460 del Adel equivalent on large lentils and $485+ on nippers otherwise holding.
Peas- Pea prices picked back up the past fortnight to $310 Port Adelaide in Viterra. Demand seemed to be limited to the Viterra system though with delivered bids not matching the price increases. As we stated last outlook report, pea prices should have limited down side purely on a feed perspective with feed grains across Aus-tralia relatively tight. The key demand for PEAK grade comes from China and India. India with the 50% duty in place and a big pea crop themselves will certainly not be bidding up the market anytime soon and potentially, quite the opposite with rumours of restricting im-ports further. Key demand will come from China but as always, we are competing against Canadian exports where they have significant stocks. Look to keep sales ticking over targeting a $330 delivered or $310+ Viterra. Whispers of a buyer doing a bulk shipment out of Adelaide are circulating which could see prices hit this range.
Chickpeas- The global balance sheet can swing sharply as yield is never a certainty- but for now the Mexican harvest looks safe and the market will be flat whilst Mexico floods the market. Cur-rent projections have stocks to use at the high-est since 2014 this year with planting intentions up for North America. Growers holding signifi-cant tonnes of chickpeas should consider taking some risk off the table before Mexican exports really kick off and sell at current levels whilst taking advantage of what is left of Ramadan hype. Reply With Quote
Apr 15, 2018 | 15:34 3 Summary—The past fortnight has seen new crop canola in the Outer Harbour Zone trade relatively flat, staying rangebound be-tween $510/MT and $515/MT. Basis through this period has continued to grind lower to now sit at -€38.20.
The past 2 weeks has seen Matif Rapeseed futures trade within a reasonably tight range between €344/MT and €349/MT. However Wednesday 4th saw the futures break this range to now sit at €352.5. Rapeseed futures were largely flat through the back half of March as markets eyed data from the USDA and Canada. Farm-ers and traders are trying to get a firmer grasp on expected U.S. and Canadian production after a series of conflicting reports indi-cated a wide range of expected production in the year ahead. The latest USDA acreage and stocks reported U.S canola area planted will come in at just over 840,127 hectares, an increase of just 404 hectares on last season.
Supply & Demand- Late March saw the International Grain Council issue its first forecasts for global rapeseed and canola. The coun-cil projected total output of 75.6 MMT, an increase on last year by roughly 900,000 MT and a new record high. With that in mind, global consumption is expected to rise by about 1.7 MMT to 75.8 MMT, a figure that will help reduce total global stocks by about 300,000 MT. Both China and the European Union are expected to see the greater share of inventory declines. Unfortunately, Austral-ia, Canada, and Ukraine are expected to see a combined inventory level at the end of the next season at 3.1 MMT. This would be the largest combined figure among these key markets since 2009-10 and certainly will weigh on prices in these nations. The IGC is pro-jecting that canola output in Canada will hit 21.7 MMT, a new record and an overall year-over-year increase of about 400,000 MT. However, this report is disputed by the USDA, who are project-ing a smaller Canadian crop of just 20,.5MMT on the assumption that drier conditions in the Prairies will create parched seeding conditions and the potential for fungal issues for grower who ne-glected rotations.
USDA Report- Late March saw the release of an overall bullish 2018 March Quarterly Stocks and Prospective Plantings report from the USDA, particularly for soybeans. Soybeans traded softer leading into the report as traders were anticipating an increase in
area planted for soybeans on last year. However, the report re-vealed that the planting intentions of growers is actually to plant 36 million hectares of soybeans, down 486,000 hectares on last season and 769,000 hectares less than the average trade esti-mate. Despite the reduction in area planted, for the first time since 1983, soybean hectares are projected to be higher than corn hec-tares planted. With corn area planted also down, the void is ex-pected to be filled with an increase in the area planted for spring wheat and cotton. The other large surprise out of the report was the revelation that soybean stocks as of March 1 sat at 57.34MMT, up a staggering 10MMT year on year. This figure came in 1.76MMT over the average trade estimate and indicates the largest March 1 soybean stocks on record. It also implies a quar-terly residual rate of -1.87MMT, meaning soy stocks have been larger than what monthly usage rates had implied. Cumulative residual stocks are the lowest since 2007/08 and suggests last year’s crop may have been underestimated.
Fight for acres- Despite the large increase in stocks, it was the planting intentions which drove the soybean market, with the May soybean contract adding 26.75c/bu to close at 1044c/bu on the back of the report. However, since then, soybean futures have been extremely volatile. This has been primarily due to tensions between the U.S. and the worlds largest soybean importer, China. In retaliation to President Trump’s proposed tariffs on Chinese imports, China announced a proposed 25% tariff on U.S origin soybeans. With China importing over 60% of U.S soybeans, the announcement was understandably bearish, with soybean futures shedding 22c/bu of value to close at 1015c/bu. However, this came after the contract reached 984/cu/bu upon announcement of the proposed tariffs.
The battle for acres between soybeans and corn this season looks to be hotter than ever. The corn-soybean spread has been coming back for soy, which in turn is not going to be supportive for soy-bean area planted. With soybean area already unusually higher comparative to corn, there will be room for it to come back particu-larly when considering the suggested Chinese soybean tariff and its potential to make growers lose confidence in soybeans.
Outlook- The current situation sees certain elements of the oilseed complex performing positively for Australian grow-ers. Most notable of these was the Matif Rapeseed futures, which broke its range on Wednesday and has since moved higher. However, the Euro’s short-term trend seems to be in the downward direction at this stage, which should continue to provide sup-port for Rapeseed values going forward. Unfortu-nately, this means the AUD/EUR is moving up, mak-ing Australian canola less attractive. Soybean meal is the other element of the complex which is also in an upward trend. It is suggested growers continue to target sales around the $520 for the 18/19 sea-son, and look to make a sale once the current rape-seed trend looks to consolidate. Reply With Quote
Apr 15, 2018 | 16:17 4 Thank you!! Reply With Quote
Apr 15, 2018 | 16:20 5 Awesome reports Malle 👍👍 Reply With Quote
Apr 15, 2018 | 19:20 6 Alway good to have perspectives, and one should allwas listen to the other side of the story🙂 Reply With Quote
Apr 16, 2018 | 01:02 7 Is his canadian viewpoint correct or incorrect or inbetween rarearth Reply With Quote
Apr 16, 2018 | 07:40 8 It’s difficult to follow the big picture, supply and demand numbers that the various agencies come out with. I try to gage if it seems reasonable or not. Your message seems reasonable and I have no holes to pick in it.
But..
Global stocks of all commodities seems adequate to high. I just googled global population growth per day and it is about 225,000 people per day. That’s a lot of demand growth ( most of it in regions that have low/no income)

Everything is a cycle, and if global stocks start to level off and go down it should be good for production agriculture of all kinds. Reply With Quote
Apr 16, 2018 | 15:25 9 yeah catch 22 what do people and govt want CHEAP food we want fair to average prices Reply With Quote