Western Weekly Recap: Unpacking the surge in canola futures amid rising demand, shifting trade, and variable yields.

WHEAT

Spring Wheat Futures Decline: Spring wheat futures dropped over 11 cents for December, closing at 605’2 for the week, reflecting pressure on wheat prices.

Yield Updates: Manitoba’s crop estimates report winter wheat yields of 60-90 bushels per acre (BPA), exceeding the 5-year average of 55 BPA, while spring wheat averaged 55-60 bpa, slightly below the 5-year average of 60 BPA.

Global Planting & Weather Concerns: US winter wheat planting progress was reported at 73%, slightly below the average of 76%, with Argentina’s recent rainfall labelled a “game changer” for wheat prospects, improving potential yields to 18.6 million metric tons (MMT).

International Production Estimates: Australia’s 24/25 wheat production is estimated at 28.5 MMT by the US ag attaché, 3.5 MMT below USDA’s October WASDE report, as ongoing dry conditions stress small grain production, especially in southern and western Australia.

CANOLA

Canola Futures Surge: Canola futures rose significantly last week, closing at $654.90/MT for January contracts, driven by increased export demand, particularly from China, and firm performance in the vegetable oil complex.

Crop Yields and Weather Impact: In Manitoba, variable canola yields (25-65 BPA) and soybean yields averaging 40 BPA reflect weather challenges like high moisture and disease; similarly, Brazil and Argentina’s favourable rainfall is expected to boost planting and crop establishment.

Shift in Trade Dynamics and Demand: China’s soybean imports from Brazil increased by 13% year-over-year, while U.S. imports fell by 15%. Meanwhile, Indonesia’s biodiesel mandate will increase to 40% palm oil-based fuel (B40) starting January 2025, supporting domestic demand.

Market Movements and Fund Positions: Malaysian palm oil and EU rapeseed futures reached highs, impacting canola and soy oil prices. Additionally, funds reduced their net short position in canola by over 20,000 contracts, while soybean shorts increased by over 17,000.

PEAS

MB released crop estimates last week that showed average pea yields in 2024 ranged from 40 to 60 bu/acre, which compares with the five-year average of 50 bu.

AB released their final crop report for the year with yields estimated at 35.3bpa. The final report for SK will be issued on Oct. 30.

Desi chickpea prices (the main reason for the Indian 0 tariff extension on yellow peas) in India have declined as more yellow peas are being substituted.

Australian chickpeas are also weighing on the desi market as a big desi chickpea harvest is just around the corner.

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