Episode Transcript
[00:00:00] Speaker A: All right, folks, markets this morning. Canola. I wrote down three bucks. I just want to double check because you. Yeah, okay. We'll stick with that for now. It's been as low as a low of eight bucks here today, so. But we'll stay with the three, seven, eight, six. On the November contract. We've only traded this level and higher twice in the last. In this year. In this calendar year, June 3, June 4, we were higher than these levels today. That is it.
All right, so if you're thinking about hedging canola here, you might be on the right path. Soybeans down 3 cents at 1191. Spring wheat giving back a penny after some pretty strong gains here the last couple of days, even the last week or so. Right. Kansas wheat currently up 3 cents at 6.69. This was 6.90 yesterday at one point. So we are giving back a little bit from yesterday's highs. Corn down about a nickel at 4.36. Bean oil's trading at 71.45. It's gaining a little bit of war premium, a little bit of strength here over the last couple days. Speaking of that war premium, we have West Texas trading at 80 bucks a barrel, up 2% today. We'll cover that in the headlines in just a second. And the Canadian dollar, I think I wrote. I wrote 71.30. Is that correct?
Am I chicken scratch?
Yeah, 71.30.
[00:01:21] Speaker B: There we go.
[00:01:22] Speaker A: Canadian dollar trading higher as well. Oh, and oats. I put oats in the mix here today. Down six cents at 355. All right, I just wanted to give a quick shout out here to John DePape from the trading floor. He did a little bit of basis work here. And just highlighting some very, very strong basis opportunities for canola at the crush plants in eastern Saskatchewan. All right, he wrote down a positive 23 for Richardson in Yorkton. It's got a plus 17 basis at Louis Dreyfus. And then there's a couple. Not as significant, but a plus five and a zero. All right, so just showing some strong basis opportunities for those of you with old crop canola signaling a bit of tight carryover. That's what it looks like to me, at least in eastern Saskatchewan. Portions of Manitoba as well. Lastly, here, before we get to headlines, urea has jumped up in price again. You have war premium coming back in, and we are thinking the high seven hundreds now for urea out there. So definitely off the lows with the war stuff going on. This week's cup of coffee is sponsored by Brownlee's Ag Tech. Check out products like the Full Bin Sensor 2 at Brownlee's CA.
Now this is a device that's going to help, you know, when the bin is full, avoid the spills, avoid the tension, the tension that happens when someone overfills the bin. You know that look you get from your dad from across the yard, like idiot. Anyways, you can avoid all that. Check out Brownlees CA for the latest and greatest technology there. When it comes to headlines, we've got hot, hot weather for the Prairies, for the U.S. now the U.S. forecast has changed slightly, a little bit better I guess from a temperature perspective, but nonetheless, hot weather for the prairies here over the next couple of weeks, which is normal for July, right? But there we go. We have China has bought 4% of the 25 million metric tons of U.S. soybeans. They did that in the last week. Now it's crazy to me that this is a headline and that we need to talk about this because it is 4%. But there we go. Our neighbors to the south love talking about this number.
And China's got a long ways to go to meet that obligation.
We've got crop conditions. Corn 68% good to excellent. Soybean 65 good percent good to excellent. Spring wheat 58% good to excellent. The trend here folks is that they are all better than the five year average.
It's a bit of a snapshot, you know, in the past though, what are we going to see in the next few weeks that's more important but that crop trends less than last year. Again, big crops last year, less than last year, but above the five year average. Winter wheat 67% harvested. That's also ahead of the average there which is 61%. Speaking of our wheat rally, the Kerch Strait, there was a closure or some type of delay. This is of course where Russia will move transit 25% of their wheat through the Kerch Strait. There were some attacks from Ukraine and there's been some discussion about is that traffic still flowing? What's that look like? Wheat markets rallied on that news late last week and then again finally with war, third consecutive night of strikes on, on Iran from the US So that war premium folks is back in the mix here. The war premium is entering back on many of the different things that we're, we're talking about here.
Chuck. Welcome to the program, sir. How are you doing this morning?
[00:05:00] Speaker B: Well, doing pretty well. Trying to stay cool.
[00:05:02] Speaker A: I thought you were going to do all the prairies when you hit the Road last week I thought you were going to swing north as well and get it all kind of covered off, but it looks like you stuck to the south part of the prairies.
[00:05:14] Speaker B: No, actually we did do a whole loop. So Moose Jaw, Cypress Hills, Waterton, and then straight up the Gut to Edmonton. What, across the Saskatoon, through Yorkton. Through. Yeah, you saw.
[00:05:25] Speaker A: I was right here.
[00:05:26] Speaker B: Of course you can never.
[00:05:27] Speaker A: I was right here, Chuck.
[00:05:28] Speaker B: I was.
[00:05:29] Speaker A: The 16 highways right there.
[00:05:33] Speaker B: Well, I didn't get an invite.
[00:05:34] Speaker A: All right, all right, all right, Fair enough, fair enough.
[00:05:37] Speaker B: So.
[00:05:37] Speaker A: So we had some questions come in here, some dandies. Scott wants to talk about large green lentils and, you know, if he should be bullish. Large green lentils. We've got. Donald wants to talk about green peas and what to do with his old crop. Green peas and then a couple of questions around wheat and Canola. But why don't you give us a little bit of insight on your road trip? I didn't realize that you drove a mile and a half from away from my house.
What did you see? Like, we have a divided.
I was going to say a divided country. That's a different topic, though. But a divided group of farmers. We've got some farms saying, you know, and end of the world brutal it is when they look out their windows. Terrible conditions. You know, this crop is going to the moon. Pricewater. And then we have other farms that call me and say, I can't believe Canola's flirting with 800. I want to sell it all. My crop looks so good. Like, give us some perspective. We'll try not to beat you up.
[00:06:34] Speaker B: Okay, I'll give you the lowdown.
Here's what I know based on what I saw, and again, it's the 120 click tour. But they're both right. Both groups are right. What struck me is that there were very few parts of the prairies that didn't have some flooding, like some drowning spots and things like that. Almost everywhere had something like that. Now, the severity varied a lot. Close to Winnipeg, actually, there's quite a bit of lost acres. But then you see it all the way through, all the way through to Moose Jaw and beyond. The area where you are, of course, that's some of the worst stuff. And then probably the worst worst would be like Foam Lake, you know that area when you're coming down the 16, you know, in and around that Yorkton area, there was, you know, 30, 40% of the fields were nothing.
And then there were some fields you could tell that hadn't got Seeded at all.
So there were those areas but then where it wasn't flooded in the non drowned spots, things were looking really good. Even on, you know, when we drove, you know, through west and we got up to Swift and down to Maple Creek and you know, and down that way like the hilltops are nice green like just as, just as lush as the bottoms of the valleys or the bottoms of the hills. Right.
So that tells you something too that you're not losing a whole lot there. The one notable crop though, I would have to say would be the lentils especially.
Well, no, on both sides right around Moose Jaw it's not bad. But east of there and west of there you see lots of yellowing of lentils, like big patches of, of the fields. And so that's not just flooding, that's
[00:08:19] Speaker A: disease in my agronomic expertise opinion.
[00:08:24] Speaker B: Yeah, my non agronomic opinion.
But yeah, so there were lots of those areas. And you know, then we're down in, in Cypress Hills talking to a farmer there and he just got off the phone in his mustard crop and got hailed out and you know, lots of hail, so lots of hail events too. But, but yeah, where, where it isn't drowned out in the non low spots.
You know, the cereals especially the canola is looking, looking quite good. So yeah, it, they're both right.
[00:08:54] Speaker A: It does also vary by crop too. Right. Like the wheat crops hang on, you know, a little bit better. So it seems in this moisture. You know, for me I, I've been surprised at how poor the canola crops actually look in my area. Like you kind of expect that crop to.
It does such a good job of, of finding a way to rebound and maybe that's coming.
[00:09:16] Speaker B: But, but it's also as it, as you know, the wheat, the cereals start heading and the canola is blooming, it's harder to see those low spots that are missing. Like when you're getting, when you're driving down the road, you don't see those low spots. They kind of get hidden.
[00:09:32] Speaker A: So Chuck, is it? I think we're talking about some extremes here, Price wise, where you have a group saying, oh my goodness, like the Price is going to the moon. And then you have the other group saying, oh my God, price is going to drop so hard after that tour. Like would you come out of there and feel kind of neutral at the end of the day where, you know, maybe Price has reasons to rally a bit here or maybe it does have reasons to drop a little bit, but it's not as extreme.
[00:10:01] Speaker B: Yeah, I mean, it really does vary by crop.
You know, when you're trying to figure it out, you, okay, you lose. Okay, you're trying to figure out how many acres you've lost to no crop.
And then, well, what are the yields on the non lost? And so trying to balance those two for some of the crops, for most of the crops, I would say average to above average yields. Lentils, again, would be the exception. That one's going to really struggle.
So it really does vary. So you're trying to calculate those. But one of the things, when I'm looking at the charts right now, of course, you know, we follow these seasonals and, you know, we expect prices to keep dropping during the summer. And when they don't, that's telling you something like, it's not like the seasonals are broken, but when they don't follow the seasonals, when you get a bounce in Canola and in wheat, and I mean, the bounce in wheat is still fairly anemic, but, you know, when you get a bit of a bounce during the middle of the time when they should be going lower, that's telling you something.
And it tells you something about longer term. I mean, in the Canola market, we were friendly toward it even before all of the flooding and even with, you know, the big acres and all of that kind of stuff, next year is going to be tight anyway. So my opinion is that we're not going to. Prices aren't going to bar for things like that. Once you get into the fall, they're going to come back or they've already. We've had an early bottom in the seasonals, you know, where we bottomed out, you know, and so we're already seeing signs of things tightening up a little bit. And then you throw Europe into the mix and all of that kind of stuff, the heat wave there, you know, those are. Those are all friendly signals.
[00:11:40] Speaker A: I would say, yeah, fair enough. And I.
With Canola, we needed. We needed a lot of acres. You know, we needed a bunch of acres. We needed some good yields. And now we have those acres. What they are will. Time will tell in December, I suppose.
[00:11:56] Speaker B: Yeah. And sorry, I'm going to throw in one other thing. Think about last year. We had record Canola yields, record wheat yields, all of those kind of things. And the markets still came back in fall and still peaked in spring.
So, you know, even if we have some really good crops again, you know, I don't think we're going to do more than we did last year.
[00:12:17] Speaker A: This is another question I had for you. But Jerome is getting beat up by his grain elevator right now. Like, it's like, not a fist fight, but they're tossing some blows at him. But they're basically telling him, jerome, buddy, if you don't sell your new crop, yellow peas, this week, our price is tanking and it's over. Right? It is July 14th. So Jerome said, well, Ryan, like, what's going on here? Like, should I be that intimidated by this drop in yellow pea prices? And I was like, you know what? Chuck's on the show tomorrow. I'm going to ask him. So, like, what?
[00:12:51] Speaker B: You know, they do. They do this every year.
Every year they do this. You know, the markets are dropping in summer, and, you know, and maybe that's their legitimate opinion, but prices drop, as, you know, as we've always said, many times, prices drop during the summer, and then they come back in the fall. We've got the data. We've run the data, and I think for yellow peas, like, nine out of the last 10 years, prices have come back from whatever the August. You know, from mid August or whatever, prices have come back nine out of 10 years.
And this year, we'll have both China and India buying peas for the fall.
And if there are. And we had lower yellow pea acres than we thought there would be. So I would tell, you know, Jerome to. To just, like, yeah, you know, go fishing. Just hit the. Just. Just. Yeah, kill the call when he sees it coming from his buyer.
[00:13:40] Speaker A: Yeah, for sure. Okay. I also wanted to ask about Europe here a little bit. Like, I see some analysts talking about the heat in France and very concerned about crop production. Like, are we.
Are we underplaying that? The impact to this? Like, is it maybe a bit worse or are we overdoing it? Like, what do you think about the heat in France and some of the European crops?
[00:14:06] Speaker B: Well, it varies by crop because you've got the winter crops that were mostly done, you know, close to harvest as that heat hit, and there might be a little bit of effect on those crops. So the winter wheat, the durum, the canola may be a little bit more affected, or their rapeseed, I should say. But it's the corn and sunflowers that we don't typically spend much time thinking about. If western Europe has a much smaller corn crop, well, then they need to import more corn.
They won't be exporting barley as much because they'll be keeping it in house, those kind of things. And the sunflower crop is a big, big deal in Europe in terms of veg Oil complex and things like that. So all of those things will have spillover effects on feed grains and on oilseeds, even though we don't get the direct effect from the winter wheat in the Durham so much.
[00:15:03] Speaker A: Okay, fair enough. So switching gears now, back to lentils for a second, Scott's wondering about large green lentils. He's wondering with the drowned out acres, with what you're seeing out there, you know, is there a chance that prices can react to the positive here or is there too much carryover from last year?
[00:15:21] Speaker B: Yeah, like the carryover is really interesting in the lentils. I mean, we've got actually on our s. And these, we've got fairly low carryover of red lentils, lots and lots of green lentils. But then if you split that out, most of that or a large chunk of that is small greens.
So the large green component is a bit smaller. Again, I would suggest that there is some room for upside in large green lentils and especially the situation in India with their monsoon rains. So June was dry, very dry right at the end of June. And the first week or so of July, they started to get more monsoon rains then. Now they've dropped off again. And so they're growing their turr crop, their pigeon pea crop.
And if they don't get that, then they're going to import more green lentils. And they typically start with large greens, and then when those run low, then they'll switch to mediums and small greens. So I think there is some room for some upside. The amount of upside will depend on how bad things get in India. So, yeah, that would be my thought. So I know you need quick answers.
[00:16:28] Speaker A: Oh, we got to get. I gotta get. You gotta get my daughter to camp.
Exactly. Okay. And then Donald about green peas. So, you know, green pulses here today, he's got old crop. He's being offered $10 a bushel. He's like, should I just take it and move on or should I stay a little bit patient? They're good quality. They're very good quality green peas. So, yeah, yeah.
[00:16:52] Speaker B: I don't know if I have as much optimism. I think there's probably room for some optimism in green peas.
The problem is we've got, you know, we got a bunch of buyers that buy smaller amounts. And then it's China, and there's nothing going on right now in China. That would mean we're going to have an extra amount of demand for green peas. So I think that's going to be roughly steady. Ten bucks to me. You know, again, with carry, like, if you want to carry it into next year, you know, you probably have to wait till later in 26, 27.
So, you know, depending on what your carry costs are and things like that, to me, 10 bucks can't predict the future perfectly.
Surprise, surprise. You know, I don't think there's a whole lot of upside that would, you know, do much more than carry in that market.
[00:17:34] Speaker A: Okay. All right. Awesome. Well, that covers it for Pulse this year. I did get one question from Jordan about looking at spring wheat for 2027. He said December 27 is trading at 725. Is this a good chance or opportunity to lock in some futures for that 2027 crop?
Chuck, I don't know in spring wheat, if you're finding any optimism out there in the spring wheat market, but any thoughts around that?
[00:18:02] Speaker B: The 27 crop is a whole lot different. But if we're starting to develop some questions about the wheat market or some cautious optimism, again, it's rebounding. Probably the downside or the drop was overdone in the first place and now we're getting back to a more whatever. But the fact that it is rebounding to some degree, even in the middle of the normal seasonal declines, tells me that there's a little bit of concern. I think we're going to have good wheat yields here, good wheat yields in North Dakota. So I think we're going to see that seven and a quarter.
Yeah, that's not bad. If we see the rally in old crop or in the 26, 27, like the December 26 futures and things like that, it'll probably carry the 27 higher as well to some degree, but not a bad place to start.
[00:18:55] Speaker A: Yeah, I would look and I would look at break evens. You know, if you're going to forward contract that far out, how. How close to your break even are you? You kind of have a fertilizer budget you could pencil in now. So one last one for you, Chuck, because Wheat King is on the stream every Tuesday. So I got to throw this one in there, says, what's going on with China and pea protein? Why did they ban it? I think they put some type of restriction on us, didn't they?
[00:19:16] Speaker B: Yeah, it was actually pea starch. Pea starch that they. That they put the tariffs on. I think that's mostly a symbolic kind of.
Because the amounts are really small. It's 24,000 tons. Just in the last two or three years, we've ramped up exports to China. Just looking at the trade data yesterday. And so we did 24,000 tons there of pea starch, and it was sold to China at prices that are relatively low.
So there might be something to that. I mean, we just sell to, you know, starch is the byproduct. It's the unwanted part of the protein extraction. So these companies, you know, are just looking for markets. Anyone who will take this starch.
So I don't, I don't see it as a big sign that there's. There's bigger problems out there or things like that. I think it's mostly symbolic. It's almost like China was saying, you know, let's find something fairly small, slap a tariff on it. Just as a bit of a, hey, heads up. Or. Or we got to look like we're doing something or something like that, you know, for the p. Processing the protein. Places like Roquette or those kind. Yeah, that's going to be a bit of a hurt because now they'll need to find somewhere else to sell the starch to. But it doesn't keep me up at night anyway, that way.
[00:20:29] Speaker A: Fair enough. Appreciate those comments and thanks for the question weeking as well. All right, folks, well, that wraps up cup of coffee here for this Tuesday.
The next time we record this show, we're going to be live from the John Deere booth. We're doing a equipment release, some big equipment release live on cup of Coffee. So that'll be next Tuesday. Live from Egg in Motion. This week's cup of coffee is brought to you by Brownlee's AG Tech. If you've ever wondered, is the bin full yet? Their full bin sensor too takes the guesswork out of filling your grain bins. Head to www.brownlees.ca and check out the full bin sensor 2 free shipping as well within Canada and the U.S. i'm out of coffee, folks. That's it for this week. Thank you, Chuck, for being on the show.
Friday's what the Futures episode is going to feature Eric and Lloyd Dick from Brett Young. We're also going to update your crop marketing plans here for summer. We'll talk egg and motion activations and how can you get your hands on this hat or our limited edition T shirt. So stay tuned for that. That's it, folks. Thank you so much. Take care.
