ISSUE 116, February 12, 2024

SEED UPDATE

Keith Horton, Seed Division Manager

It is the time of year when many producers are beginning to think about the upcoming planting season. A large part of that decision is not just which crops will get planted on the farm this year, but also what variety and seed will be best for the operation. At Columbia Grain, we can help in making that decision. In the PNW region, we carry spring wheat, garb, canola, and pulse seed options. For producers in Montana, we offer pea, lentil, and mustard seed. Corn, soybean, and dry beans are available in North Dakota. For all regions, we have high-quality seed treat options available as well.

For Montana producers that are considering planting dry peas this year, the seed must be treated with a fungicide that is registered for the management of seed and soil-borne diseases. This includes Ascochyta, which can be devasting for untreated pea seed. Should Ascochyta blight damage occur in the field the insured producer must provide proof that fungicides registered for the management of Ascochyta were used in order to avoid an uninsurable cause of loss. CGI can help with this by selling seed that has been treated or treating the seed that you plan on seeding.



For seed and treating pricing information contact your local Columbia Grain elevator. Also, feel free to contact us with any questions that you may have in selecting the right crop and seed variety for your operation this year.

If you grow dry peas in Idaho, Washington or Oregon, be sure to check with your insurance agent before planting. These requirements may soon be added for your growing area:

• Seed must be treated with fungicides registered for management of seed-borne (including Ascochyta) and soil-borne diseases.
• If Ascochyta blight damage occurs in the field, the insured must provide proof that fungicides registered for management of Ascochyta were used in order to avoid an Uninsurable cause of loss.

The February USDA World Agriculture Supply and Demand numbers are out and have been discussed in subsequent articles in this issue of the newsletter. Forward looking is the key to a successful marketing plan – using history as a guide should absolutely be a part of your marketing plan but hindsight marketing does no one any good. Could have, should have, would have does not bring markets back to old levels, good or bad. Using the information, we have in hand today to help enhance our predictive intelligence for what we believe tomorrow will bring is what turns a good marketing plan into a great marketing plan. Executing and being able to change your marketing plan is an essential part as well – don’t get “analysis paralysis”, in other words, don’t overanalyze the markets to the point that you can’t make a decision or miss an opportunity, especially with how fast the markets can move in today’s environment.

Cost of production and the economic net return by commodity is in hot debate currently and with the March 31st planting intentions report on the horizon we are beginning to see the debate heat up a bit. Given today's “burdensome” ending stock numbers, corn in particular, it is hard to get overly excited thinking the markets will have much enthusiasm to move higher. If we do see markets turn higher, we need to have resting orders out there to sell into any rallies we see – using orders to start any marketing tool that we have to offer in our Columbia Producer Solutions platform from Cash to HTA, basis contracts or accumulator contracts get those plans out there and working.

Having resting sell orders in place to be a scale-up seller this year is a great start to capitalize on the marketing environment we find ourselves in today. No doubt we have taken a lot out of the market in terms of price from where we were the last few years but again hindsight marketing does not help anything at this point – let's use the information that we have at hand today to build out our marketing plans for the coming year.

Be sure to reach out to your local buyer, merchandiser, and managers to go over all the alternatives we have in our Columbia Producer Solutions platform.

WHITE WHEAT

Steve Yorke, Merchant

BEANS & PULSES

Ryan Van Pevenage, Merchant

LENTILS

A rollercoaster of a market with volatility mainly in the new crop. The volatility is being driven mainly by India demand that continues to push and pull to get their needed stocks while maintaining pricing power within the market. Other markets such as South America and Europe sit and wait for hopeful lower values within the market. This waiting can cause additional demand later in the spring to maintain stable pricing and continued volatility. Rumblings of seed shortages within the new crop lentils surround the market but please reach out to your local CGI representative if you have seed needs not met.

PEAS

Following the Indian government opening for peas with zero duty through the arrival of March 31, the market now awaits if this duty-free permitting will be extended beyond March 31 to allow for more business to be done. Canadian grower has moved on-farm stocks 15% ahead of the 5-year pace, showing tighter stocks for the last half of the 2023 crop. Green peas maintain tightness with short supply of high-quality stocks but also found to have rationed a large amount of high-volume demand. Both green and yellow peas await the USDA to issue larger volume tenders with more consistency to provide a spark to the USA pea market. 

CHICKPEAS

Majority of the market is awaiting several global chickpea crops that are currently in the ground. India and Mexico being the drivers of large-size chickpeas, both areas fighting through drought concerns, and both areas very tight-lipped concerning the true conditions of the area. Ramadan demand will likely deplete a majority of large-caliber global chickpeas stocks so the progression of these crops will be vital to 2024 chickpea values.

DRY BEANS

Dry Beans markets have been well bid for current crop in recent weeks. Mexico is coming back into the market to cover the remainder of their 23/24 needs as well as gaining coverage in 24/25 crop year. BeanCon24, 2/1-2/3 in Cancun, Mexico, had a huge turnout with many Latin American companies coming to buy spot beans and gain a deeper understanding of conditions that will shape the next 10 months of business. New Crop Dry Bean acreage is expected to be up substantially due to very appealing planting economics versus other crops. Be sure and reach out to your CGI manager for Seed Prices and availability. Dry Bean seed is in limited supply this year. 

INTERNATIONAL

Wiley Wang, Merchant

In the past two weeks we continue to see smaller than expected demand on all commodities at PNW export market. The demand shift we had seen from Gulf/South America to PNW due to logistics debacles caused by lower Panama Canal water level only lasted so long, then market quickly adjusted by lower export prices at those origination ports and higher prices at PNW. Global wheat demand is continuing to be fulfilled by lower protein lower quality out of EU, Argentina, and Australia. The high protein high quality spring wheat markets are facing high competition from Canadian CWRS, as usual. 

Soybean crush margins in China are stabilized at very negative level and may stay here for an extended period, until confidence begins to improve from all processors. Judging by the broad economic barometers, everything still points to a worse outlook which is hard to believe since it has been going down for such a long time already. On top of this, with a total production of over 180 mln mt corn and 205 mln mt soy from South America, when Chinese demand shows up, it may not come to PNW. 

China and some of the Asian countries will be in holidays to celebrate the lunar new year which is Feb 10th and will last a couple of days to about a week. So expect things to further slowdown in the next week.  

BARLEY

Ryan Statz, Merchant

Recent developments in regard to the logistical backlogs combined with slumping malt demand have wiped malting barley interest off the table for the time being. Does this come back in the near future? Possibly, but it will be subdued and with it will come relaxed prices. This comes at a difficult time as seeding prospects are being analyzed. Simply put, the increased pessimism will make malting barley acreage forecasting challenging to say the least. The market knows the premiums that the industry is capable of, but we also know the recent challenges the market is facing in regard to sluggish demand and lots of supply stemming from last years near record crop. 

DURUM

Ryan Statz, Merchant

On February 8, the market was given two critical pieces of newsflow – 1) USDA / WASDE Monthly Report & 2) Stat Canada Grain Stock Report. 



On the durum side, most attention will be paid to the StatCan report for verification (or not) of market saturation. September – December seemed very sluggish in terms of moving bushels and the market has been wrestling with how much supply will be carried forward to the ‘24/25 marketing campaign. 

Results: CANADA, StatCan 

Dec 31 Durum Stocks 2.959 MT. 

This figure seems low in comparison to last year’s numbers, however, the export landscape is completely different. Last year, North America was really the only game in town for overseas coverage in the Nov-April time period. This year, with the introduction of Turkey, import dependence from North America is completely pressured. Gone are the days of heavy North African and Italian exports (at least this year) and because of it, prices have fallen to attract interest. The market in Canada knows it needs to use (domestically or internationally) another 2.0-2.5 MMT over the course of the next 7 months to be in a comfortable/neutral supply situation… if usage is less (pace thus far suggests less usage), prices will continue to trek downwards into the ‘24/25 campaign. What was once a supply problem is now a demand problem.

HARD RED

WINTER WHEAT

Justin Beach, Merchant

SOYBEANS

Joe Foley, Merchant

Soybean prices continue under pressure with mostly stable, favorable growing conditions in South America and accordingly slowing demand for U.S. origin exports. Indeed, the just released USDA WASDE report reduced U.S. exports by 35mln bushels and increased our carryout accordingly. Ending stocks are now pegged at 315mln bushels, which is up 70mln bushels since their December estimate. Growing carryouts in the U.S. tend to suggest lower prices on the horizon, which would coincide with managed money that has built short positions across corn, wheat and soybeans. It is noteworthy, however, that local observers in Brazil are less sanguine about their crop prospects. CONAB this a.m. released their local estimates of Brazil’s production, showing 149.4mmt for soy and 113.7mmt for corn. These numbers compare to the just released USDA projections of 156.0 and 124.0, respectively. Brazil is well into their harvest now with generally favorable yields as harvest progresses south. The Brazilian farmer is undersold like his U.S. counterpart, which in combination with relatively poor Chinese demand has led to very cheap export offers for March forward positions, which are nearly 2.00/bu cheaper than U.S. origin supplies. There does still remain critical weather ahead for Argentina, but as of now their crop prospects are very good. Look for more discussions about the ’24-25 U.S. acreage mix going forward, but today’s USDA numbers don’t offer much encouragement for the bulls.

CORN

Joe Foley, Merchant

Corn prices continue to flounder under the weight of burdensome carryout estimates, along with favorable growing conditions in both Brazil and Argentina. The pace of planting for Brazil’s winter (safrinha) crop is nearing a record pace of some 30pct, following brisk soybean harvesting. Early planting of Brazil’s second corn crop is significant as it shifts pollination to seasonally more favorable growing conditions. Argentina likewise is still forecast to produce 55mmt, which stands in sharp contrast to last year’s disastrous 35mmt crop. Accordingly, their exports for this year are pegged @ 41mmt, which exceeds last year’s total by 17mmt. Today’s WASDE released a nearly unchanged U.S. balance sheet, save a 10mln bushel reduction in domestic demand. The one bright spot this year has been significantly higher exports than last yr; total commitments now exceed a year ago by over 8mmt. Unfortunately, that still leaves a projected 2.172 billion bushel carryout, basis today’s USDA report. Similarly, the pace of U.S. exports will seasonally slow May or June as both Argentina and Brazil will offer acute export competition by then, coinciding with their local harvests. Expect further weakness in prices as the market looks to the March planting intentions report on March 31st.

HARD RED

SPRING WHEAT

Rudy Weitze, Merchant

Spring wheat futures have been treading water with little news impacting the market and fund positions getting all the attention. For the month of February, front month Minneapolis futures have fallen 8 cents and have shown a range of 25 cents. New information has been lacking and todays USDA report offered little support to the market. As the March contract begins to wind down the March-May spread has been taking center stage, moving from a 10 cent carry to nearly even. Funds did wittle away at their large net short position, they now see themselves at 27,100 contracts short. One thing that’s interesting to note is that funds aren’t just short Minneapolis wheat, they’re short basically every major ag futures contract. 

Cash markets are slightly weaker despite rail performance being a persistent challenge. Nearby milling coverage looks great, as mills had to buy extra wheat to handle the rail delays. They continue to target AMJJ slots for purchases, but the values they are looking to buy don’t seem to interest the market. We’ve seen farmer movement pick up which has helped to provide some liquidity to the offer side of the market. I know I stress this continuously, but more farmer movement or selling is liable to push basis off its current highs. Exports are still steady as they continue to work through rail freight challenges. Once railroads get their act together (which likely won’t take long based on the weather), I think we’re liable to see basis fall out of bed. If you’re still sitting on quite a bit of spring wheat in the bin, a basis contract is still a great way to go. That combined with producer solutions is still an excellent way to extract better prices for your wheat.