AgraSight Newsletter | May 23rd, 2021
An essential read covering grain markets & agribusiness news in Canada.
Rainy season is finally hitting us in the prairies Woot Woot!… Wet conditions appear to hold heading into this coming week but many weather analysts still suggest dry conditions will prevail overall.
Highlights:
FCC 2021 Cattle and Hog Outlook Update
Corn Market Corrects but Weather to Dictate Price Future
Glyphosates Price Hike is Headed to Canada
Deere Launches Chore Tractor Lineup
Markets
FCC 2021 Cattle and Hog Outlook Update
Prices should continue to improve from February forecasts. Majority of prices are expected to exceed 2020 prices, while Alberta fed and feeder cattle will remain lower as feedlots find themselves sandwiched between high feed costs pushing up slaughter rates and packers buying cheaper cattle now for fall delvery.
African swine fever resurgence in China, Asia, and Europe continues to drive global pork markets. With doubts about China’s ability to manage the virus their imports of both pork and beef will remain elevated until a vaccine is available.
China’s pork imports were at an all-time high in March and pork production in Q1 has jumped 31.9%.
Feed prices are high and will likely face sustained pressure throughout the next three months. Without an improved forecast for moisture, given dwindling stocks and the strong and growing demand for corn, both North and South American production may not be enough in 2021 to meet that demand.
Corn Market Corrects but Weather to Dictate Price Future
As you likely expected much of the western corn belt this season is experiencing poor moisture and a North Dakota has been experiencing drought. That makes it hard for us to believe that the USDA is expecting a record national average of 179.5 bushels per acre in their may 12th monthly supply and demand report.
The USDA’s monthly supply and demand report suggested that grain supply in 2021-22 should turn out better then the current shortages we are experiencing. We can’t lean on the hopes it will be a comfortable situation and as traders return their attention to weather forecasts, prices could again rally with the worries developing over dry soil in North or South America.
There were sharp declines across all grain and oilseed crops on May 13. On May 14 the decline continued for corn, while wheat dug in and oilseeds managed to claw back a portion of the losses. Corn fell hardest partly because it had been leading the charge higher this spring.
This years prospective planting survey marked this years corn area at 91.1 million acres with harvested area at 83.5 million acres. Yeild is marked at 179.5, just shy of 15 billion bushels. Now counting domestic and export demand, 2021-22 ending stocks are predicted to be 1.507 billion bushels, up from the current 1.257 billion bushels.
These stock numbers heavily rely on that record yield of 179.5 bu. per acre that desperately needs “normal” weather conditions to hold true. But with that said another variable in play is actual planted acres. The original prospective planted acres was considered low at 91.1 million acres. The final planted acreage report comes out June 30th and it wont come as a surprise if corn seeded area comes in 4-5 million acres up from the prospective planting report given the strong rally since the survey was conducted.
Crops
Farmers Warned to Expect Glyphosate Price Hike
Active ingredient prices double in China and as a result we can be sure to expect a rise in prices in Canada. The effects of the doubling in prices has already been seen in the United States where glyphosate is being sold for no less than $20/gallon but the concern isn't necessarily the prices but the difficulty on finding gylphosate itself.
Wholesalers and retailers in Canada will be slower to respond to the changes but there will be a price response when the supply chain reloads.
AgriBusiness Global forecasted the price of glyphosate 95 percent, at and average of $6.20 to $6.90 USD per kilogram in China, the highest level in three years and up twice the amount of last year. Bad news for farmers in Western Canada who are heavy users of the crop input.
David Li, author of the AgriBusiness Global story and business manager with Beijing-based SPM Biosciences Inc., said the run-up in prices was triggered by the flood in Sichuan province in the summer of 2020 that suspended production at the Fuhua Tongda Agrochemical Technology facility.
That resulted in “a significant gap in supply” that has continued into 2021, according to Li.
Machinery
Deere Launches Chore Tractor Lineup
John Deere adds a new small tractor to their 5 series lineup and spruced it up with larger tractor features.
A factory installed guidance system for Autotrac, when paired with the PowrQuad push-button transmission, is now available on the 5M machines. The lineup used to stop at 115 horsepower, but an new 125 horsepower unit has been added for the 2022 model year, the 5125M. Models are now available from 75 horsepower.
Greg Christensen of Deere says if a producer wants add even further guidance assistance for the tractors, it is now a plug-in away from as applied maps and prescription tools.
A panoramic roof is also available on the new models for 2022, allowed livestock operators to better manage bales and other high work with the loaders.
For forage operations, the new higher horsepower unit with improved guidance and the clutchless transmission, should be more attractive, said Christensen.
Ag Action Quick Bites
— Canola bides it’s time. In January 2020, the United States National Biodiesel Board announced it was setting an “ambitious target” of doubling biodiesel/renewable diesel production to 22.7 billion litres by 2030. Turns out it wasn’t nearly ambitious enough.
— According to the federal government’s Hopper Car Fleet Annual Report for 2019, the number of federal hoppers in service dropped to 7,193 cars by Jan. 1, 2020, down from 7,749 cars a year earlier. That a reduction of 556 cars, or nearly seven percent of the fleet, in 12 months.
— Construction of a $220 million expansion at Saskatchewan Mining and Minerals Inc. at Chaplin is slated to begin later this year. The expansion is expected to be complete in late 2023 and will allow the sodium sulfate plant to produce 150,000 tonnes of sulfate potash fertilizer (SOP) each year.
— The European Union appears to be backtracking on its stance that gene-edited crops should be treated the same way as genetically modified crops.
— While Canadian mustard seed production is expected to increase for the 2021-22 crop year, one broker thinks it may fall short of both Statistics Canada’s planting projections and production seen in 2019-20.
“Behold the turtle. He makes progress only when he sticks his neck out”.
— James Bryant Conant
Thanks for reading and have a great May long!