Ryan Statz, Merchant

BARLEY

A picture is worth a thousand words. The below chart illustrates how US Barley Production and Ending Stocks correlate with farm prices. Starting in the ‘21/22 crop campaign, due to the extreme drought seen throughout the northern tier of the US, production/ending stocks were slashed which led to a significant price uptick - $7.00 / bu. Moving forward, overall US production has rebounded to ‘average’ levels for the ‘22/23 crop year yet prices remain north of $7.50 / bu – why?

It is about the displacement of where the production uptick occurred and where it lagged. Yes, overall US production rebounded in a big way, but Montana individually didn’t see the production uptick to the same degree – this has supported prices as Montana demand is still in need of keeping supply chains full. As we look forward to next years ‘23/24 crop, Montana is the last piece to getting overall supply chains back in check. Yes, it is still early as we do not have the crop in the ground, but if Montana sees the big acreage uptick that is expected, we are on our way to satisfying this supply issue. If this comes to fruition, do prices still need to be in the $7.00-$8.00 / bu range or do we fall back closer to historical values ~$5.00 / bu.? We don’t have this answer today, but it is something to consider. 

DURUM

Durum markets remain quiet and subdued on the heels of slowing international demand, volatile spring wheat markets, and improving planting conditions. In lieu of the quietness, there are a number of factors that remain impactful as we move into durum wheat planting. Happy markets and stay safe.  

See below for some word-find fun!  

HARD RED SPRING WHEAT AND HARD RED WINTER WHEAT

Sam Ohden, Merchant

Red wheat futures have found themselves as followers to the rest of the ag complex over the last two weeks without many meaningful fundamental inputs. There continues to be uncertainty regarding the stability or longevity of the Black Sea region’s exports with the Grain Deal between Russia, Ukraine, and Turkey being extended only another 60 days instead of the 120 that the market expected. At the end of the day, the market does not seem to be willing to leg flat prices higher until it perceives there is an imminent disruption to the export agreement. 

In cash markets, both spring wheat and winter wheat continue to feel weak, despite a lack of recent farmer selling, with millers well covered through June and export demand being lackluster. We continue to see US Government donation business (albeit no more than the market expected) and normal demand from our core customer base off the PNW (namely Japan, Taiwan, and Korea). The result of this has been a market that feels heavy and has pressured basis.

In terms of global wheat market competitiveness, there’s nothing new to report. The US remains a high-priced island (albeit with superior quality, to be fair) with Black Sea region wheat dollars, not cents, cheaper than US origin. For those looking for high protein red milling wheat, Canadian offers out of Vancouver, BC remain 50 to 60 cents per bushel cheaper than what the US is able to offer.  

Moving forward, I expect wheat to get yanked around from South American and southern US plains weather forecasts (as Brazil’s safrinha corn crop is entering a vegetative state and the US HRW crop is exiting dormancy) and the rest of the agricultural complex. The old crop story for red wheats seems to be clearly defined at this time so the market will be trading wheat largely as an intermarket relationship to corn and soybeans.  

NORTH DAKOTA AGRONOMY OUTLOOK 

Cole Lavalley, Merchant

A big topic for North Dakota right now is the climate as we slowly progress toward spring. Our future forecast predicts that winter will still likely be here for the rest of march, pushing into the beginning of April. On top of the continuing weather, we have reached near-record snowfalls for our region. Looking at the upside to our snow load, frost depths are relatively shallow which may lead to a quick thaw. We are likely looking into May, possibly late April for the start of plant nutrition application. Looking at Fertilizer markets, NOLA urea is trading sideways as of now, but I expect to see the price increase as we hit demand for in-season tons. Phosphate could see a tight market moving forward because of possible supply issues. This comes due to growers cutting back costs on previous years when we saw the market relatively high, meaning we will need to apply more P to keep our soil nutritional levels at a healthy balance. Potash and AMS will likely remain flat moving into this year’s spring season. As far as the acreage swings due to a tight planting window, doesn’t seem to be a topic of discussion yet. Producers are still very confident on moving forward with their 2023 crop plans. 

OILSEED MARKET

Sean Ferguson, Merchant

It has been a whirlwind of a past couple of weeks in the canola market. Roughly two weeks ago nearby canola futures were trading at 815 CAD/MT, now they are trading at 720 CAD/MT (as of close on the day of 3/22). This drop is the lowest level nearby canola has seen since 2021. ICE canola has not been alone in this recent board destruction – Matif rapeseed futures have fallen to their lowest level since 2021 as well. Technical support is pushing itself further and further backward in the historical calendar. Some of the big drivers of the board movement has been general macro concerns (US banking failures, possible continued interest rate hikes, and an overall economic worry), increased EU imports of Ukrainian rapeseed (and subsequently less imports of Canadian canola), as well as the massive Australian crop continuing to make its way into the global markets. CBOT meal and oil have also been weaker over the past few weeks. All factors combined do not currently make for a promising story on the canola front. 

There has not been a significant amount of movement on the forex front. A few weeks ago, the USD was riding high off the assumption the FED was to raise the interest rate 50 BPS, although we know today that is not the case in wake of the most recent bank failures; the FED was pressured into taking a 25 BPS hike instead of the originally planned 50 BPS, subsequently lowering the USD from where it was a few weeks ago. CAD has been lower over a lower crude over the past few weeks. With both the CAD and USD lower at similar magnitudes, the CAD/USD has been holding steady around the .727-.73 mark. 

COLUMBIA GRAIN PRODUCER SOLUTIONS

Phil Symons

We have mentioned in past editions that the market will dictate what marketing tools we should be using, anything from traditional contracts, such as Cash contracts, HTA’s, Basis and Minimum Price contracts. To the more structured contracts, such as the Accumulator contract platform that we offer through Columbia Producer Solutions. 



To highlight one of the marketing tools that has had wonderful success this past year through our Columbia Producer Solutions platform, below is an example of the “No Barrier Accumulator” 

The example below highlights how we were able to execute a forward sale for a producer and actually lock their futures price in at a price HIGHER than the life of the contract high in Kansas September 2023 Futures!!!! The high for Kansas September 2023 Futures was $11.59 back in May of 2022. Using the “No Barrier Accumulator” we were able to lock in Kansas September 2023 futures for this specific grower at $11.60, that is HIGHER THAN THE LIFE OF THE CONTRACT HIGH. Now, this specific contract will price at least the initial bushels commited to this contract, but it does have a double up potential in quantity. This specific contract will only double in bushel amount if Kansas September 2023 futures close over $11.60 on the last day of the pricing time period. Looking back on this now if we are able to sell $11.60 again I think a lot of people would be happy with that!! But the major benefit to this contract is that it will not get “Knocked-Out” prematurely. This can be a major advantage especially in looking at how the futures markets have traded since this specific contract was started. 

Be sure to get a hold of your local Columbia Grain Merchandiser to see how one of these tools might fit into your marketing plan. Remember there is no one size fits all approach and everyones marketing plan and tools will be different. 

*past performance is not indicative of futures performance* 

SOFT WHITE WHEAT

Steve Yorke, Merchant 

Markets continue to get beat down after Russia decided to extend the Black Sea corridor agreement for another 60 days, along with some much-needed rain in the midwest and the talk of a switch to El Nino from La Nina which could help some U.S. crops. Also weighing on the markets has been slow export business as Russia, Canada, and Australia continue to capture demand from the U.S. White wheat exports remain on track to hit 185-190MBU but that will be the max as China and Yemen(CCC) demand has been limited. As we have mentioned in the past the white wheat balance sheet will be tight moving into the next marketing year so any issues with this year’s crop will be closely watched. Weather in the PNW has been mostly ideal with plentiful moisture and mild temps. Seeding season is approaching so some dry stretches will be needed to get things off to a smooth start. New crop prices are hovering around 7.20-7.50 and will need some strong demand to push values higher. Basis may have to do the work with the recent drop in futures. Keep in contact with our buyers to ensure pricing orders are placed so when rallies occur targets can be hit.

BEANS & PULSES

Ryan Van Pevenage, Merchant

LENTILS

Market continues to look for a lot of strength on a usual spring rally. Algeria banned imports on February 8th and has remained closed to commercial business. Government buying has covered some of their needs but remains far behind typical import pace. Any change in policy or tenders from the government could cause sizeable spot demand and large upward possibility within the market. 

PEAS

Russian peas working into China without import issues is causing Canadian stocks to sit late in the crop year. This change will likely cause some widening in price spreads between conventional #2 peas of both colors and variety-specific programs. If you are interested in a new crop contract for variety-specific programs, please reach out to your local CGI manager. 

CHICKPEAS

Global stocks tighten as Mexico and Argentina both have a decrease in production. Indian crop was nothing more than average and USA and Canadian stocks find themselves on fumes coming into the spring. We await to see how the market will react to projected planting reports for both USA and Canada over the coming weeks. 

DRY BEANS

After many long weeks of slow demand, we begin to see new crop 2023 demand come to the table. USDA money and support provided several large tenders that have caused some uncertainty within the market for upside potential. Overall Macro complex makes dry beans a very competitive return for 2023 crop. Reach out to your local CGI representative to get a quote on seed.

CORN & SOYBEAN

Ben Hoggarth, Merchant

Corn values have firmed rapidly on international demand as China, Korea, and Japan have all come into the market as buyers. Futures values have seen a long skid to the downside, presenting a negative face to cash bids despite firming basis. The northern tier continues to experience severe winter weather as snow and storms have presented logistical issues as trucks and rail have had difficulty performing in adverse conditions. The BNSF has struggled to operate through the snow as trains have poor performance on turns and have even been left to sit at origins for extended periods of time. 

Soybeans have seen incremental demand appear, but the focus remains on new crop as the market continues to take shape. Argentina continues to struggle with supply due to a decimated crop and fallout from the “soy dollar” program that was used last year to encourage producer selling. High inflation rates and the lack of a preferable soy dollar exchange rate have producers in an unwilling position to sell. Brazil continues to realize its crop size as selling volume continues to increase, however logistical errors due to wet conditions delaying harvest has allowed the US to secure some spot business this late in the year. 

Much of the market continues to be dictated by global factors. International demand for corn has found its way to the US. The ongoing Russia and Ukraine conflict continues to impact the global market. Reports vary but it is largely understood they have reached a 60-day extension on their grain corridor deal, allowing for grain to continue to flow out of the area. This 60-day extension was followed up by Russia’s demands to renew the grain corridor further. South America continues to be the focus of the corn and soybean market as Brazil’s great crop year remains wet and battles with potential logistics issues while Argentina works to estimate the size of its burned-up crop.