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Feed Peas: Not as expensive as they seem. BottomingSaskatchewan FOB Farm Feed Pea prices seem to be carrying a big premium to Feed Wheat and Feed Barley values. Given the history of this three-way relationship, it would be easy to imagine that Feed Peas could slip further. However, Feed Peas can also be compared to both Corn and Soy Meal futures expressed in Canadian dollars, and their rallies make Feed Peas look cheap! Feed Peas prices may not do much until other Prairie feed grains recover further, but the bottom has probably been found.
Lentils: Crimsons stronger than Lairds. For how Long?Lentil varieties regularly exhibit unique variations in price behaviour and this year is no exception. In recent weeks, average delivered elevator prices for Crimson Lentils in Saskatchewan have enjoyed a strong rally. New Crop Crimson bids have been pulled up to levels which are higher than post-harvest prices were in 2012 and 2013. This buoyancy is bound to attract acreage and increase future supplies. Note Crimson’s proximity to their old highs which could provide overhead resistance, and the approach of their typically steep seasonal downturn. In contrast, Laird Lentil prices have been relatively lethargic and are currently well below their old highs and 5 and 9 Year Averages. Even New Crop Laird prices are about ¾ of a cent/lb below Crimsons. Some can be forgiven if they are not excited, but, if the result is relatively tighter future supplies, this year’s typical post-harvest price recovery could be better than average.
Edible Beans: Pintos take a tumble Pinto Beans are demonstrably more volatile than Navy and Black Beans, but the magnitude of their 2014 price drop is remarkable. Although Pintos do not have a history of “leading” the others, the price differences may have encouraged acreage switches in favour of the higher priced Navies and Blacks. If so, greater supplies of Navies and Blacks and a smaller crop of Pintos could encourage prices to converge again. However, this does pose a risk that Navy Bean and Pinto prices could soften somewhat. Finally, remember that Edible Beans tend to make abrupt price adjustments each year in June, so any surprise should be sooner rather than later.
Yellow Peas: Between rain and competitive pricingYellows may be caught in a near term tug-of-war between the bullish threat of excess moisture and the bearish menace of weaker Corn. Looking at Yellow Pea prices in isolation, their slow recovery and shallow uptrend line seems to be stalling underneath a zone of overhead resistance. Moreover, the typical seasonal tendency suggests the threat of a fairly immediate downturn. Given that Yellow Pea prices have a rough relationship with both Corn and Feed Wheat, CBOT Corn’s recent retreat is reminiscent of the 2009 experience that ultimately pulled the other two lower. However, in 2009, it is noteworthy that Yellows had a late bout of strength (arrow) before heading down. Might this year’s excessive rains produce similar behaviour?
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Crimson Lentils: Prudent precaution or buying panic?When prices test a key chart breakout level, it often means that market has a major decision to make. For Crimson Lentils, one question to be answered concerns the significance of this year’s tardy and lighter than normal Indian monsoon rains. Over coming weeks, South Asian buyers will make production/supply judgements based on local conditions and set their import strategy accordingly. As a major Crimson exporter, Canada often fills the role of “swing” supplier and our prices reflect their decisions. While waiting for a chart breakout or failure, note that New Crop Crimson prices are below old crop and not far from the long term average of $0.226/lb. This may suggest ongoing commercial caution in front of a probably large Canadian crop. For the moment, the Crimson chart can not confirm if recent price gains represent simple precautionary buying or the first sign of a scramble. That answer should come soon.
Green Peas: Looking vulnerable In recent days, average delivered elevator prices for Green Peas have dropped and are now testing a major support level. This is critical because the typical seasonal tendency for Green Pea prices suggests another month of downward pressure, thereby making a break of support possible. Then resulting disappointment would trigger even more Green Pea price declines. Looked at another way, during planting season for each of last three years (arrows), Green Pea prices have carried a hefty premium to Yellows. Therefore, the clear signal to Prairie farmers has been to grow Greens, and it seems that many may have taken the hint. If so, greater supplies could cause Green Pea prices to fall. A “swing measure” or “measured move” produces a rough target of $8/bu.