![Corn, canola troubles abroad give local market hope Corn, canola troubles abroad give local market hope](/images/transform/v1/crop/frm/silverstone-agfeed/824637.jpg/r0_0_420_284_w1200_h678_fmax.jpg)
THE international grain market received a kick along from both the projected supply and demand balance sheet and weather concerns, even though Australian prices have yet to reflect the bullish news.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
The big winners have been the canola and corn sectors.
Weather concerns have seen a surge on the all-important Canadian canola futures exchanges, while last week’s US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) found tighter than expected corn stocks.
Corn prices have risen due to the WASDE numbers, which found stronger than expected demand from the ethanol sector would mean supply and demand balance sheets will be tighter than previously expected.
Canola has risen sharply on fundamentals in the past week, with heavy rain in Canada’s prairie provinces, in particular north-east Saskatchewan, raising concerns about canola acreages.
As a result, canola prices have bolted on the key Canadian futures exchanges.
The November 10 contract on the Winnipeg exchange flew up C$11 (A$12.40) a tonne this week, the biggest daily gain for ten months, which has meant seven consecutive trading sessions where the canola price has risen.
There’s expected to be some big reductions in plantings through Canada’s western provinces.
Currently, wire reports suggest up to 1.25 million hectares of prime canola country will not be planted due to the big wet, which has dumped unseasonably heavy rain over the western prairies.
In Sasketchewan alone, there is estimated to be a 23pc cut in canola acres from Statistics Canada’s April estimates.
Based on average Canadian yields of 2.4 tonnes to the hectare, it equates to three million tonnes of lost production thus far, and with rain of up to 50mm still predicted for later this week, it could get worse.
Overall, it is forecast that up to a sixth of projected spring crop plantings in Canada will not take place.
It will have a massive impact on world canola markets, with Canada the world’s largest exporter of canola, representing around a third of the world canola export trade.
Even with a best-case finish to the season, the Canadian crop is expected to be its smallest for three years.
The Canadian rain may also have a small influence on wheat prices, with limitations on the spring wheat crop.
Meanwhile, the USDA made major revisions to both the 2009/10 and 2010/11 corn balance sheets reflecting recent demand strength – particularly from the ethanol industry.
Rabobank analyst Luke Chandler said the USDA had increased their estimate of ethanol use by a further 150 million bushels to 4.55 billion bushels in the 2009/10 season, reflecting the record use together with on-going profitable margins for most producers.
In addition, they have also raised forecasts for the 2010/11 season by a further 100 million bushels to 4.7 billion bushels.
“The magnitude of these changes is likely to come as a surprise to most in the market,” he said.
Other positive news for Australian wheat growers included the USDA lowering world wheat production estimates by 3.7 million tonnes, due to production concerns.
The bullish news is yet to filter through to Aussie markets as yet.
ASX NSW wheat for Jan 10 delivery traded at $210/t on Tuesday, roughly unchanged from values observed late last week.
The recent improvement in US wheat prices has been largely offset by renewed strength in the Aussie dollar.
On the canola front, new crop forward contract prices remain steady at around $450/t port.