AgraSight 🌾 Newsletter March 7th
Vital agriculture news enabling you to stay ahead of the rest by keeping you in the loop, and saving you time.
INTRODUCTION:
Hello everyone and thank you for joining us for this week’s newsletter. This week has been flying by and is packed with action. We’ll be covering the weather forecast from The Weather Network, Canada lentil exports, FarmersEdge’s debut in the TSX, and nitrogen fertilizer expectations in Q1 and Q2.
If you have any questions do not hesitate to contact us by replying to this email, or emailing agrasight@gmail.com.
This week’s table of contents:
Competition from Other Crops to Hurt Sunflower Output
Weather Network Spring Forecast
Farmers Edge Trading Debut
Nitrogen Prices to Stay Strong
Canada Lentil Exports to Turkey
Canola Nudges Higher in Volatile Trade
U.S. Dominance in Global Grain Markets has Faded
Our 3 Ag Jobs of the Week
1. Competition from Other Crops to Hurt Sunflower Output - Syngenta
Thoughts around sunflower production in Canada this year point towards a decrease in production after reaching record levels in 2020.
In 2020 sunflower acres in Canada hiked to 112,000 acres (+46%) amounting to 101,300 tonnes of production. Additionally, American sunflower acre went up and production hiked in 2020 amounting to 1.35 million tonnes (+52%).
Agriculture Canada projects new-crop sunflower seeded area at 86,485 acres, a decrease of 22% from 2020.
Continuing their upward trend the past weeks, with North Dakota crushers oil-type sunflower prices at US$20.75 to $21.15/cwt. New-crop US prices run about US$21 to $21.25/cwt.
Comments from Robert Deraas, Minnesota-based general manager of Scoular’s sunflower and bird food business in Winkler, MB
“There’s much more crop competition than last year (from) all major and specialty crops. It’s made it more difficult, more competitive for sunflowers in this marketplace.”
The demand is very stable and not subject so much to the highs and lows of world price fluctuations.”
“We fully expect acres will go down in 2021 and the price will be at or near 2020 levels.”
2. Weather Network Spring Forecast: Potentially Wet for Ontario; Dry for Prairies - Syngenta
Weather Network’s seasonal forecast has producers in the prairies crossing their fingers for rain. While Ontario is preparing for seeding delays.
Wetter spring conditions expected in Ontario and belief in widespread flooding risk lower than normal due to below normal snowpack across the majority of the province. Additionally, the Weather Network forecasted a warmer spring for Ontario compared to previous years.
For prairie producers, the Weather Network is expecting spring will see typical water levels alleviating the dry conditions that currently plague southern Saskatchewan and Manitoba. However, concerns of the drought south of the border potentially impacting the southern parts of SK and MB by the start of the growing season.
March is expected to feature dramatically warmer conditions than February in Manitoba and Saskatchewan with expected warmer-than-normal temperatures, predominantly in the first half of the month. Near normal temperatures in spring though across southern areas and the far north.
Similarly as above for Ontario, but cooler averages in spring.
Near normal precipitation is expected for most of Alberta, but above-normal precipitation is predicted for the central and southern Rockies.
AccuWeather forecast raises some concern of deepening drought in parts of the Prairies.
Source: DePutter Publishing Ltd.
“We are still at risk for parting shots of winter, and a period of colder weather is expected during mid-spring before more consistent warmth sets in, but we do not expect the colder weather will take over the season as it has during the past few years.”
Wheater Links
Current prairie radar here
Current Canada radar here
Current U.S. radar here
B.C. weather here
3. Farmers Edge jumps 18% in Toronto trading debut after IPO - Bloomberg
Winnipeg, MB-based startup stock surges to CDN$20.50 in the first hour of its trading debut in the TSX. An 18% increase from its IPO price of $17 a share giving the company a market value of about $814 million based on 40.7 million outstanding shares.
Farmers Edge uses technology and artificial intelligence to collect and analyze local weather, soil moisture and satellite data to help growers boost crop yields and farm more efficiently. The firm, co-founded in 2005 by Wade Barnes, has turned to public markets as the agriculture industry shows heightened interest in using technology to improve outputs, curb greenhouse gas emissions and digitize operations.
The investment banks that managed the sale, which was led by National Bank of Canada and Canadian Imperial Bank of Commerce, have an option to sell an additional 15 per cent of the offering.
4. Nitrogen prices to stay strong till after spring - Western Producer
Nutrient president, Chuck Magro, anticipates high prices for Q1 of 2021.
An additional 10 million acres expected in the United States alone, and the southern regions expecting more corn. The company also anticipates strong nitrogen use in Canada.
3 to 5 million tonnes of urea expected for export to China in 2021. A decrease from 2020 in response to stronger domestic demand and higher coal prices.
Nitrogen supply and demand remain tight in the short-term, especially with the cost of production of N in Europe and other global regions.
Prices are expected to fall in the second half of 2021 due to new supply hitting the market having what was referred to as a “reset effect” on N fertilizer prices
Comments from Chuck Magro
“There’s no question that nitrogen is going to have a very strong spring season around the world.”
“If you recall, last fall, the fall application season was cut short in Canada.”
“We’ve got very strong canola prices up here and we’re expecting just a very solid spring season, and fertilizer is still moving to the farm right now for storage and supply chain management right now in Canada.”
“I think the fundamental question that we have to ask ourselves is what happens after the spring season.”
“So we do expect, after the spring season, for prices to subside somewhat but with higher lows than we saw last year, which I think is important.”
“But I think longer-term, the supply-demand fundamentals are quite strong in nitrogen.”
Crop input expenditures are projected to increase in 2021
Corn futures prices have increased 30 percent since July from feed and export demand, and recovering ethanol production, says CropLife. expecting strong N demand in North America, India, and Brazil.
CF Industries forecasted 90 million acres of U.S. corn in 2021. A big user of nitrogen.
Higher energy prices in Europe and Asia could curtail the production of the crop input.
CropLife comments
“We believe that these developments will support a firm outlook for the global market, at least in the first half of 2021 as nitrogen products continue to provide farmers with tremendous value relative to their cash costs.”
5. Canada Lentil Exports to Turkey Expected to Ease - Syngenta
Statistics Canada data reports 534,160 tonnes of Canadian lentils valued at C$355 million were imported by turkey in 2020 making them the second-largest buyer of Canadian lentils behind India.
In the past year, Canadian lentil exports were driven by below-average domestic harvest and lower import tariffs.
A big reason for the hike in Canadian shipments is Turkish export demand shifted from Kazakhstan to Canada.
Additionally, Turkey will have a large production of its own this year (as much as +30%) potentially limiting Canadian exports. Although dryness could be a complication.
Comments from Mac Ross, Pulse Canada director of market access
“Pulse growers and exporters right now should focus on India.”
“We saw over the past year they are willing to adjust their lentil tariffs up and down when needed. At Pulse Canada, we’re going to push for predictability and transparency in how India runs their import policy and their tariffs.”
6. Canola Nudges Higher in Volatile Trade - ICE
Canola futures closed higher Monday, after a volatile session with wide swings.
Tightening Canadian canola supplies continued to underpin values.
May canola ended 20 cents higher at $739.40, July was up 50 cents at $705.30 and November gained 50 cents to $596.
7. U.S. dominance in global grain markets has faded despite robust exports - Reuters
Many consider the United States to be the king of corn, wheat, and soybean exports, while the countries’ lack of relative impact on the global exports is painting a different picture.
High grain and oilseed prices, increasing global demand, and weaker currencies have all contributed to the decline in U.S. export dominance.
The US exports just over a quarter of the world’s corn, wheat, and soybeans. 30 years ago they contributed twice that amount.
Despite the slip, the U.S. Department of Agriculture predicts record domestic export volumes of corn and soybeans in the 2020-21 year ending on Aug. 31 due to increasing global demand led by China.
Soybean Exports
In the 1970s the U.S. was supplying 95% of world exports in soybeans with their huge leaps in technology and research.
Brazil began to emerge and became most pronounced in the last decade, becoming the top exporter in 2012 now accounting for half of the global exports. The U.S. share to 35%.
Corn exports
The U.S. still remains the top corn supplier but now only accounting for 33% of global export in comparison to 60% in 2005.
As you see in the diagram the U.S. now contributes 15% of global corn exports as opposed to 80% in the late 1970s and 1980s
Wheat exports
Similarly, the United States was on top of the wheat export market but due to recent booming wheat production and export capabilities the Black Sea, Russia, and Ukraine are doubling the annual U.S. volumes.
Now the second-largest behind Russia, accounting for roughly 14% of global trade. Canada a close third.
Ten years ago U.S. wheat export was around 23% and continues to decline. Half of the U.S. wheat crop is exported, unchanged over the last 20 years
Widespread crop failures boost global prices increasing production outside of America.
The devaluing of Russia’s currency in 2014 was a major factor in the rise of Black Seas wheat production and trade. A weaker Brazilian real has caused farmers to heavily market their recent and upcoming corn and soybean harvests, and plant a record area of both in the current year.
But runaway inflation actually keeps supplies from the export market.
Disclaimer:
Information contained herein is believed to be accurate but is not guaranteed. AgraSight and information sources assume no responsibility or liability for any action taken as a result of any information or advice contained in these reports, and any action taken is solely at the liability and responsibility of the user.
8. Our 3 Ag Jobs of the Week.
Agriculture and Agri-Food Canada - Commerce Officer (Winnipeg, MB)
Seniority level: Entry level
Industry: Government admin.
Employment type: Full-time
Job functions: Other
Salary: $52,793 to $58,838
Richardson - Sales Agronomist (Morinville, AB)
Seniority level: Associate
Industry: Information technology & services, food production, mechanical or industrial engeneering
Employment type: Full-time
Job functions: Research, analyst, information technology
FarmersEdge - Precision Technology Specialist (Humbolt, SK)
Seniority level: Entry level
Industry: Marketing & advertising, information technology & services, computer software
Employment type: Full-time
Job functions: Other
Additional reads:
Tech Takes the Wheel: John Deere Delivers Solutions Beyond Iron - AgWeb
Q&A: Regenerative Ag Trends With Dirt To Dinner’s Lucy Stitzer - AgWeb
Thanks for reading our agribusiness newsletter this week. Don’t hesitate to reach out if you have any questions!
Have a great Sunday everyone,
-Austin