February 2017

February 2017 –

Uncertainty is an uncomfortable position, but certainty is an absurd one – Voltaire.

 

 

 

 

January 2017

Happy New Year!   As I look toward January 1, I am feeling a greater sense of discomfort rather than optimism as we cross into 2017.   Many of the things we took for granted for the last few years no longer look so solid.   Of course, all things change and our job is to continually rebalance our positions for future market changes.    When I look into 2017 I see some of the usual ones.   What will growers plant?  Is there enough/too much soil moisture?  What will be the stocks in September?   These are complicated and moving targets, but ones that are accepted and managed.   Other trends, starting with the populist governments elected in the USA, UK, India, Venezuela to name a few are worrisome.   The systems and institutions that global traders holds dear look like they are about to be severely tested.   Indians and Venezuelans cannot trust the currency that they hold in their hands.   Countries around the world are pressuring to impede the flow of foreign goods and citizens at every turn.   Will India renew phyto agreements for fumigation or follow the letter of the law and throw the market into chaos?  What will the US do in 2017?  How will Canadians and our trading partners become caught in the cross-fire?   Normal people are musing about the probability of a nuclear bomb being dropped in 2017.   These are things no one has had to include in their thought process for a long time.     It will take at least until mid-year to understand where there is a hint of solid ground to trade from.   Until then the market looks a little too much like a roulette table for my comfort.

December 2016

December 2016

I waited for the Dec 6 numbers before writing this post.   Harvest conditions and subsequent quality have made it very difficult to accurately predict what was produced and what remains to sell until our new crop arrives in September 2017.   He are some extrapolations.

Lentils (2017 Production) – With zero carry-in lentils have enjoyed a good run during the first quarter of the marketing year.   However, those ideas are starting to run out of steam and indicate a more relaxed mood for the market for the remainder of 2017 and into 2018.

Large Green  Supply 538K;  With total usage expected around 520K – It is easy to predict that large green lentils will continue to retain a premium as stocks diminish through the first half of 2017.  Growers have high expectations after experiencing several years of grower prices around $70 ($1300 CIF)  Even with new crop at a 35% discount there will not be enough to satisfy basic demand and should leave the market relying heavily on Canada’s new production in the fall.

Small Green 260K;  Annual demand for Small Greens should remain around 150K.   Prices for this size have increased disproportionately with its S+D as they move in sympathy with the large green lentils.   A recent relaxation in duty from North Africa has kept demand up, but the supply should be adequate enough to limit the market’s ability for further price increases.

Red Supply 2,483K; Canadians have finally relinquished control of the red market to the fate of Indian market dynamics for the foreseeable future.  With new crop shipments filling the pipeline, new supply from Australia, fresh acres on the way from India, and no reason why Canadians will limit their seeding in the spring, we are off to a year of more relaxed prices unless we have a production failure.

Have a safe and happy holdiay.

 

 

NOVEMBER 2016

November 2016

Welcome to November.  It is what it is.   For us in the north, it is usually the beginning of a long settling in.  A period of reflection and planning for the future.   Normally, producers and exporters have taken stock of their positions and we start to get a good idea how the future of the crop will play out through the new year.

Why is this year is different?  Here are two reasons.

  • As of October 24:   21% Mustard, 3% Lentils, 75% Chickpeas, 50% Canaryseed, 47% Flaxseed, 20% Canola, 19% Spring Wheat, 23% Durum, 24% Oats, and 11% of Barley are STILL IN THE FIELD.
  • Price spreads between grades and within grades are huge.   If we just look at grower prices spread for large green lentils.    Laird 2: 50-60 cents; Laird X3: 38-48 cents; Laird 3: 32-42 cents.

The trade is frustrated that producers are not participating and allowing new business done.   In this environment, I do not see why producers would be rushing to make these decisions.   There are unsold crops in the bin.   That is for sure.  Trying to pry grain from producers who have one eye to their unharvested fields and the on a scatter chart of prices.   It is understandable they will need to defer the settling in period for another month.   See you then.

 

October 2016

October 2016

Lentil Samples from the 2016 Harvest

Estons 1 and 2

eston-1eston-2

Red 2

red-2

Laird 2’s   (Extra, Regular, Poor)

laird-extra-2laird-2laird-poor-2

Laird X3, 3, and Sample

laird-x33lairdslaird-poor-3

 

 

 

 

 

 

 

September 2016

September 2016

September 13, frost has descended over the prairies essentially putting an end to another harvest season fraught with surprise and disappointment.   As wet weather delayed harvest again this year, many were anticipating another quality disaster like 2010.   Green Lentils produced better quality and lower yields than expected in many areas.   Reds and small greens had huge crops in some areas where others were left with nothing.     Markets have reacted supporting green lentils while pulling the plug on red prices.    The question, of course, is where do we go from here?   It’s hard to be bullish on Large Greens and bearish on every other commodity.    My feeling is that we will find a bottom on special crops in the coming weeks and it won’t be that bad.   Farmers will have settled into their bin and cash needs, buyers will start marketing their cargo overseas.    The remainder of September will be a month to assess the unsold quality and quantity on farms and get down to the practice of actually marketing the crops to international markets.    Hopefully, we all remember how to do that.

CTI

August 2016

August 2016

Rain continues to fall in the same precipitation pattern we have seen through the growing season.    Heat evaporates moisture in the ground which subsequentially rains torrentially back on the crops 3-4 days later.   This pattern is predicted to continue through harvest.   Farmers are struggling.  The assumption is 20% of acres will not be harvested.   This is not a surprise.   Areas that were hit, were hit hard with flooding and have been taken out of potential production for weeks.   The reigning concern is the 80% of fields in various levels of distress from the excess moisture.  As harvest begins, we are noting the following.

  1.  Initial quality is better than expected.
  2. Yields are worse than expected.

We are expecting to receive our initial production contracts but believe the expected abundance of lentils will now be reduced by half creating a supply situation similar to 2015.    While Canada’s harvest prospects are similar to 2015, changing dynamics in other production areas of the world have not gone un-noticed.   In particular,  the sub-continent buyers are taking a much different tact with this year’s crop.   With millions of MT lentil and pea contracts on the books, sub-continent buyers are looking at decent crops from other origins and a strong production potential from their next crop.   Despite our situation, Canadian contracts are appearing more like a liability than a welcome delivery.   The change in tone is leaving the market searching for answers.   The future direction will not likely come until September when definitive picture of quality and yield reveals itself.

CTI  08/11/16