I have been enjoying some family time this month and haven’t put out much for analysis. Truthfully there has been little need for updates. I was aggressive with sales leading up to, and around, the key June USDA and StatsCan reports. July has been a pretty brutal month for grain bids, for the most part we got our sales done ahead of this drop. Until we see some actual yield results, and production/quality risks are removed (crop in the bin) there is very little marketing I am willing to do. As expected crop conditions have been declining (but still very good) and in my opinion crop scores and eventual yields are all that matters right now. Market drops have been largely speculative in traded grains (Corn, Soybeans, Wheat and Canola). They overshot the upside and will now over shoot to the low side. Eventually fundamentals will return balance to markets.
I will be sending out crop by crop updates this week. I have driven a big part of SK in the past 2 weeks, with another trip to NW SK later this week, and one through Alberta all the way up to Northern AB Peace Country next week. Crops are generally very good, with northern areas looking near average, and traditionally drier areas in the South looking very good. Excessive moisture (22% of SK) is impacting Lentils and Chick Peas hardest. Canola, Wheat, Flax, and Oats all look like they are thriving. Durum crop looks great, but quality risks are extremely high. A crop this big would normally have lower proteins, poorer color, and fusarium present. Barley is similar, crop looks good, but we need some dry weather soon and through harvest or downgrading and widening spreads are likely. Field peas look amazing right now. Looks like they developed enough plant material to withstand the water and disease management has helped most fields to look really good right now.
I am hearing of plenty of severe storm damage. While being wiped out by a storm can be extremely traumatic for farms hit, I caution against using storms as a reason to feel Bullish. Every year there are extreme weather events. Regional flooding, regional drought, hail storms etc. To put it in perspective consider how much crop you can assess if you drive for 100km checking all fields on both sides of the road. You will check about 38,000 acres. Of the major crops I analyse there are 63.708 MILLION acres. So a 100km crop tour will only show you 0.06% of the crop. A hail or rain storm 1 mile wide and 60 miles long will “only” impact 0.06%. To change the market outlook would take a minimum of a 5% crop reduction. To see a 5% crop write off you would need to drive 8,385 km with crop wiped out on both sides of the road all the way. To actually see with your own eyes 5% of prairie crops you would have to drive from Winnipeg to Calgary on the Trans Canada, then up to Grand Prairie, then back to Winnipeg via Edmonton and Saskatoon on highway 16…… TWICE! I expect most of you have seen the pictures of the girl with arms full of baseball sized hail stones and the hail hitting the South Sask river like meteors last week in Outlook SK. My camper was parked right on the golf course where those pictures were taken…..there isn’t a scratch on it. Again, I caution against taking too great an influence to your market bias by what you “see” happening. While I do believe our crop potential has decreased in the last 4 weeks I still expect to see a crop well above average, but an overall record is less likely today.