Canada Markets

It's difficult to know just how much grain has already been committed for delivery in western Canada this crop year. Daily market reports from the newswires suggest that producers are holding canola from the market, while the CWB has suggested that uncommitted grain could be as high as 65% to 80% of total production. One informal poll on a producer site, however, suggests that the amount sold could be higher than many believe.

Week 15 data from the CGC indicates that year-to-date total disappearance for wheat, durum and canola is higher than the 2011/12 crop year and higher than the three-year average.

-- Wheat disappearance is 1.2% higher than last year, while 3.8% higher than the three-year average.

-- Durum disappearance is 61.8% higher than last year, while 57.4% above the three-year average.

-- Canola disappearance is 8.9% higher than last year, while 20.7% above the 3-year average.

While this trend of higher disappearance continues, which includes both exports and domestic use, producer deliveries are falling on a weekly basis given the recent correction in price levels, while visible stocks, or stocks within commercial facilities, are well below past years.

-- Wheat visible stocks are 8.4% below last year, while .6% below the three-year average.

-- Durum visible stocks are 17.7% below last year and 2.4% below the three-year average.

-- Canola visible stocks are 28.4% below last year and 24.1% below the 3-year average.

This tightening of stocks will keep industry players on their toes and basis levels firm as new ways of attracting stocks into the system are found.

An average of accessible canola bids across the prairies resulted in a $1 per metric ton over the January basis level for December delivery, with the most attractive basis being $15/mt over the January future for December delivery. This compares to a late October analysis at $7.50/mt under and a late September average basis at $24.72/mt under. While fundamental data suggests an extremely tight situation for canola given the small crop size, the potential impact to price is perhaps less clear given the current gloomy outlook in the vegetable oils market and the financial turmoil in the global economy.

An average of accessible wheat bids across the prairies resulted in a $.93 or $34.17/mt basis under the Minneapolis December future for December delivery for #1 Red 13.5% protein wheat. The best level found was $.60 under. This can be compared to the basis level calculated at the end of October which was $.96 under and at the end of September which was $1.34/mt under. With visible stocks in the system on the decline at a time when North America may be soon in the spotlight in terms of supplying global demand and futures being pressured lower, watch for further narrowing potential of the wheat basis.

Cliff can be reached at cliff.jamieson@telventdtn.com

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