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Jan 09, 2023
This panel was originally presented live at Farmer2FarmerVI in Omaha, NE.
In this video from Farmer2FarmerVI, FBN® commodity expert Rejeana Gvillo and FBN producer specialist Callie Luck discuss the lessons learned from the rebound harvest of ‘22, conditions that will or have already impacted ‘23 and what producers in every Canadian province need to know about the market for next year.
Continue reading for key takeaways from Rejeana and Callie’s presentation, including important data visualizations, watch the video below for more detailed insights direct from the presenters, or scroll to the bottom of this post to read the complete transcript of their presentation.
Rejeana Gvillo: Senior Commodity Analyst at FBN
Callie Luck: Manager, External Producer Advisory Canada at FBN
2021 - Brazil Corn Production Slips
2021 - CA Drought Losses
2021 - Energy, Fertilizer, Chem Prices Soar
2022 - Brazil Soy, Safrinha Corn Crop Losses
2022 - Interest Rates Higher, Oil Extends Climb
2022 - War in Black Sea, Dry US So. Plains
2022 - CA Crop Rebounds
2022 - Argentina Wheat Losses
2022 - Australia Endures Wet Harvest
After a short harvest in 2021, stocks fell across the board for crops. Despite the boost in production for 2022, the stocks situation is seen remaining light this year.
Member data point to a rebound in yields; historically, Statistics Canada (SC) finds more canola in revisions. (The SC report came out on December 2, 2022.) Even with a boost in production, stocks of major crops are not burdensome.
Backfilling is still ongoing. Demand across domestic and export markets remains strong, and basis levels are likely to hold into 2023.
Oats have been under pressure on a larger crop. Trading at a sharp discount to barley, oats are likely to work more into feed. While oat price recovery is likely, barley prices are expected to remain supported.
Canada is the world’s top producer of potash, with the majority of that supply being shipped to the U.S. Alternatively, Canada brings in U.S. fertilizer. Across the board, fertilizer prices are not expected to ease in 2023.
The main concerns facing Canadian farmers in 2023 include:
High input prices
Macro uncertainty
High interest rates
Demand pull backs
Video Transcript:
Rejeana Gvillo (00:33):
I wanted to tell you just a little bit about myself. So I'm from Alabama, even though I do focus on the Canadian markets. I work from home in Alabama. I do grow up on a farm. We raised catfish for years, but now we primarily do hay and we actually have to buy our hay cutters. We use crone hay cutters, and they usually come from Minnesota, North Dakota, or Canada. We shop in Canada too. So I do live on the farm and I work with Kevin Mc new, and I went to Auburn Purdue and then Texas a and m, went all the way and worked for a firm called Informa for about five or six years. Became head of grains research there before I left and joined the FBN team. So I've been here about three and a half years and have between nine and 10 years of experience working in grain markets.
Callie Luck (01:20):
I'm call luck. I'm the manager for Canada for crop marketing. I grew up on a farm, a green farm in Dinsmore, Saskatchewan. I don't know if any of you know where that is. And now I live in Tisdale where I help on the farm with my husband. I got reduced from combine operator to like part-time grain cart, and I'm still a little bitter about it, so, but yeah. Well I'll let Regina take it away. She's gonna do most of the talking today.
Rejeana Gvillo (01:46):
Yeah. before we get too deep, I do have to read the disclaimer. So this presentation is intended for informational purposes only. It is not intended to provide specific individualized tax, business investment or professional advice. Neither farmer's business network, nor any of its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the statements or any information contained in this material. Commodity trading, including futures, hedging and speculating, involves substantial risk of loss and may not be suitable for all investors. All right, so again, we're gonna talk about how we got here, what's currently going on in y'all's market. Some of that is coming from what's happening in other countries around the world. So we'll touch on some of those key points and then we're gonna discuss what we see coming for 2023, particularly with the price environment among your key commodities.
Rejeana Gvillo (02:45):
So these are just some of the key things that have happened the past 18 months or so that have been impacting ag markets. So last year Brazilian corn production slipped. So remember, Brazil has two corn crops, summer, winter, summer, corns being planted Now in conjunction with soybeans. It's about done being planted last year. The serea or the winter crop, which is what goes in the ground after beans are cut. We had big production losses there. Part of that tied to La Nina, remember y'all had a drought last year. You weren't the only country. Brazil was very dry during the summer growing season. So we had some pretty big losses there. Y'all also had drought losses as well. Like I said, of course then we get big in prices, in input big price increases for inputs. We again have some corn crop losses in Brazil, higher interest rates of course.
Rejeana Gvillo (03:34):
Then Russia invade Ukraine sends wheat market skyrocketing, which we'll talk some more about that. Then this year, y'all's crop actually rebounded overall. I know some of you still had problems, but overall Canada had a much larger crop this year. Argentina, however, has some, has had some pretty significant wheat production losses. On the flip side, Australia's crop, even though they got thrash with rain their crop is big. It's a monster of a crop, very wet down there. And we do think there, well, we know there'll be some quality issues with wheat. So for the small number of you that grow white wheat on the west coast you'll probably benefit from that. And right now it still is dry in Argentina. And so Argentina is in the midst of planting corn and beans. It's not looking too good down there and there hasn't been much rain and that is not changing, at least in the 10 day forecast.
Rejeana Gvillo (04:25):
So I know futures prices have come off the highs that we have seen, but I want you to remember where we were two or three years ago, and we certainly were nowhere close to where we are today. Overall, futures prices remain elevated. Corn prices, they certainly have come off the highs. Every, every commodity has essentially, but we're still looking good for canola. We're still looking good overall for Minneapolis. Maybe it's not the $12 you wanted, but I think we're sitting right at nine, which isn't that bad. And we're still up from where we were again a couple years ago. So just remember we're we're, we are in this high price environment, not only on the input side, but also on the commodity side. And the good news is that overall we see this environment maintaining, which of course will, we will get into more detail as we move forward.
Rejeana Gvillo (05:12):
So what's going on domestically? Remember last year you had a short harvest short harvest season, a short crop, and as a result your exports were down substantially. And even though exports were down because production was so low, you have an overall tight stocks situation. As we rolled into this year's harvest, and even though we've got a big boost in production this year versus last year, the good news is that the stock situation overall is not expected to change much. Yes, we have more supply right now today than we had this time last year, but at the end of the crop year, we're not expecting this big burdensome supply situation for any of your commodities. We are exporting not at the pace that we'd like to, but they have been picking up here recently. Our weekly exports, which of course that we we track, your domestic demand remains great.
Rejeana Gvillo (06:03):
You're not bringing in as much US corn as you did last year because you have more free feed grain availability. Overall bases remains pretty strong. And cash prices remain pretty strong, again, off the highs that we saw last year. But hey, you got more to sell. So it's prices are still good. Despite the production rebounds, again, we're up across the board for production. This is for most commodities, but I focus primarily on canola and wheat and barley for y'all. We did survey our members to get some, or we pulled y'all to get some information about yields and I wanna thank you. Those who did respond. Y'all help us nail canola expectations. We did great on that crop. We, we missed spring weed and barley a little bit, but it was nice to see members contributing that information. So thank you.
Rejeana Gvillo (06:50):
But again, even with these boosts in production that we are seeing and that we have seen this year versus last year, the stock situation, again, not expected to be burdensome by any means. We expect to remain in this overall supportive price environment despite the, the big increases in harvest that we have seen. Stats can came out Friday, right? This chart represents those updated values. They cut back canola they cut back wheat production including Durham. Surprisingly, they added to barley. That was the, the one crop that surprised us. Really. We weren't looking for that increase in barley production quite as large, but they increased harvested area as well as yields there. So we'll talk a little bit more about barley, especially its relationship to Oats, but that was the biggest surprise for us outta Scott can we'll see if they revise it later.
Rejeana Gvillo (07:42):
For what it's worth, they do revise production numbers for a couple of years. Usually we get revisions on canola, not other crops, but we'll see. So again, basis remains elevated. Y'all have got some amazing basis prices overall for w r s canola come off the has come off the highs. The, the, it seems like the processors or the crushing facilities really needed that canola. Once harvest got well underway and since then maybe went along with some farmer selling, those base levels have come off. But overall, still a very strong basis environment, particularly for wheat and better than average, at least for canola. So these charts are just showing the average that we have across Canada. On Mondays we write about basis comments and we do break it down by province. So I encourage you to, to look at that or as always to contact an fma to discuss basis opportunities.
Rejeana Gvillo (08:34):
But W RS remains very, very attractive. I mean, you're talking two to three over in some of these locations, which is amazing. That makes your cash price very attractive. And part of this is of course on the demand side, stocks going into this crop year, very light. We think that facilities have been needing to backfill. But not only that, high protein supplies, high protein wheat supplies from last year's harvest were down because y'all and the US both had a drought and we are the dominant exporters of your high pro spring wheat. So Kazakhstan as well also had a drought last year. They also grow spring wheat and they do export some. And so all three countries had bad harvests. So that in and of itself, everybody basically across the world needs to fill in their pipelines for high pro wheat.
Rejeana Gvillo (09:21):
And so that has really helped support your bases. Again, we're not quite seeing the export numbers we'd like to see, but they have been picking up for both y'all in the US and we expect that to continue. Barley oes barley is very interesting. I enjoy studying this market and when you look at the global barley situation, it is very tight. It doesn't get a whole lot of attention like corn, beans and wheat do the big three or even canola. But the barley situation globally is very snug. Australia does have a big crop, but it's not big like the wheat and the canola crop are because they cut down planted area there like y'all did on these high-end foot prices. So the global B barley, global barley balance sheet say that three times fast is tight. It's the tightest balance sheet we've had in decades.
Rejeana Gvillo (10:08):
Okay? And this is one reason why we are seeing some supportive barley prices. Of course, again, domestically, y'all stock situation tight going into this harvest, but barley prices have been supported. I know they've come off the highs, we expect them to remain supported. And interestingly versus oats, <laugh>, oats are the opposite end of the story. Oat prices are horrible. Y'all had a big oat crop and that has really pulled back oat prices. And so the red on this chart shows when barley is trading cash prices when barley is trading at a premium to oats and the blue is vice versa. Normally normally we're not in the situation that we are today where barley is a lot more expensive. Now we do think there's some upside potential for oat prices. We just think it's gonna take a couple of months into 23 calendar year 23 for oak prices to, to really get any strength.
Rejeana Gvillo (11:03):
But we do think that given the discount they are to wheat cash week and then also barley, it should pull a little bit into the feed market. Y'all are shipping some to the US as well and we do think that's gonna end up helping support oak prices relative to where they are today. I don't think they're gonna be <laugh> where they were a year ago, but I think that they will improve some in the next few months. Barley prices overall we may see a bit of weakness from this production that came out on Friday. However, given the global situation I don't think that we're gonna get a ton of weakness from the barley markets for the rest of the crop year. So I'm gonna switch it over now to Callie because I don't know much at all about flax <laugh>.
Callie Luck (11:46):
Well, I can't say we grow flax, but so derm, you guys have probably seen this, but bids were off to, to a strong start. We've seen a slowdown now with the freeze up due to the Thunder Bay. We've had larger crops out of Kazakhstan and Russia, so they're putting in the market there. So they've been bigger there. Stats can, you guys probably saw that number derms smaller. So that will be supportive. We'll be looking for an increase in bids later in the year early break.
Rejeana Gvillo (12:16):
Yeah, we should see during prices improve from where they are today. U S D A will revise the US crop coming out in January and they've already cut back that crop market suspicion is that it could be lowered even more. The US did did win a cargo outta that recent Algerian Tinder. I suspect Canada won some too. So we know that we're competitive and we look at global prices. Canada, Canadian, Durham is competitive as well. However, I don't think that we, we haven't exhausted this market yet. We do think that there will be some upside for d moving forward, cuz remember again, high pro wheat supplies globally down last year. We're still backfilling a good bit of that. That demand
Callie Luck (12:58):
With flax, the crop was above average quality. So, and we've seen, yeah, large Russian and Kazakhstan crops fulfilling the European and China market. So the only market kind of available for you guys is us and they haven't really been buying at these prices. And farmers are also reluctant to sell their flax at a lower price. So we're a little bit worried that this could lead to a balloon in ending stocks that's gonna weigh on the market peas. So peas demand's been slower for peas too, with a combination of slower exports and then also farmers being reluctant to sell their peas as well. So we expected demand from the us but we haven't seen that yet. In India, they have, their pea prices are lower, so that's discouraging acres. So that's a positive for us. But for yellow peas, as you guys know, China's the big buyer.
Callie Luck (13:54):
So right now soy mill yellow peas aren't discounted enough. They're to encourage buying. And then I'm sure you guys have seen in the news with everything happening in China there, covid zero, the lockdowns, the protests. So that's also weighing on the market as well. We see more potential in green peas cuz they're not as dependent on China. They have more places to be exported. Red lentils. So exports off to a great start with red lentils here and stats can actually reduced lentil production as well for Canada. The big question there for everyone is Australia. I'm sure you guys have seen this in the news, but it's raining Yeah, a lot. And we all know that lentils don't like rain, so there's concerns there with the quality of lentils, but those lentils will still find a home even if they're kind of downgraded in quality. Actually South Asia is quite happy to purchase kind of lower quality lentils if they can get a discount. So those lentils will still find homes, they'll displace some of the Canadian supply. But with the lower production here in Canada, some stats can, we're gonna really gonna be looking for India to come back into the market a little bit later to kind of up some of those
Rejeana Gvillo (15:03):
Bids. Yeah, and speaking of lentils, a bears did come out Monday. That's the equivalent to stats can, but for Australia, they put the lentil crop at 1.1 million tons. Now most of Australia's lentils are grown in areas where they had substantial rain. They did discuss a quality impact, a lot of wrinkling, some discoloring however, they didn't cut back the crop that much. It's actually a record lentil crop. We wrote about it I think this morning for the chart of the day. So be sure and check that out. Again, Australia's got a big crop, they increased area production is up even with the heavy rains, but they're not through with harvest yet. So we'll see if we have any subsequent revisions there to that lentil crop. Now we're gonna switch a little bit more to the kind of the global situation. And I just wanna point out, if you don't know, y'all are the world's leading potash producer, okay?
Rejeana Gvillo (15:52):
By far y'all are the biggest potash producer. You ship a lot of that to the US and actually Canada and the US have a pretty solid fertilizer trade relationship because the US ships a lot of nitrogen based fertilizers to y'all. Okay? But talking about fertilizer and what's going on in the Black Sea, Russia, Belarus, also some top exporters of potash. And because fertilizer is a global commodity y'all also are experiencing some high input prices including fertilizers, even though you grow it yourself. We do a good bit of research on fertilizer prices. A lot of it is tied to the price of natural gas. There is some correlation there. And unfortunately, even though fertilizer prices have softened from those high levels that we were seeing a year ago, that the increase has started about a year ago we're we are not expecting prices to return to where they were two years ago, right? But remember two years ago we had lower commodity prices as well. So unfortunately on the input side, while we have seen some easing of these fertilizer values, we don't think that we're going to return to that market that, that we were in a couple years ago for fertilizer prices.
Rejeana Gvillo (17:03):
I know inflation has been a top topic across the world, not just in North America, and y'all's inflation rates are up. They did come down month over month in the, the latest report. But we know that we are facing a, an a high inflation situation here across, again, across the globe. It's not just Canada, it's not just the us Many countries are facing high inflation and your interest rates of course going up as well. We, we've had some discussions about that this week already yesterday and I think some today as well. This makes buying land and buying equipment, it makes everything more expensive. And, you know, we don't see these interest rates falling anytime soon. The US is expected to increase again, at least the Fed is expected to increase. Again, Canada may be increasing again as well, but the hikes may not be quite as quite as high, but I suspect that we're gonna be in this relatively high interest rate environment for, for some time.
Rejeana Gvillo (18:04):
All right, the global market, again, as we discussed, Australia has had some untimely rains the past week or so. It did improve. They were able to harvest some, most of this ends southeastern Australia, so we're talking New South Wales, Victoria, Queensland, those areas, it has improved. But just, just to give you an idea of what we're dealing with in Australia, Australia counts for about 20% of global canola exports. They call their crop canola. They account for about 19% of global barley exports and 9% of global wheat exports. So they are a direct competitor with Canada for rapeseed or canola and barley. Now Australia still is at war with China. Barley is a target there. So that high tariff is still in place. We do think China will continue to come to Canada for barley, although our exports to China so far are down substantially from last year at this time.
Rejeana Gvillo (18:59):
We do think that China will come back. Australia has had harvest delays. I don't think it's really impacted global trade situation much. Western Australia is a top producer and they didn't of, of these commodities and they didn't have the weather issues that Southeastern Australia did have. What it has done though, is it's created some big discrepancies in their prices domestically as well as export prices. We know for especially the southeastern areas, they're gonna have a lot more feed wheat than they normally do. A lot of that will be going to Southeast Asia. That's Australia's top market anyway. Some of it will go to feed markets. Higher quality of course will go to noodles, but we think that Australia's gonna have a, an exceptionally large portion of their wheat crop that that's going to be feed wheat quality instead of food grade quality.
Rejeana Gvillo (19:48):
I, so again, for white wheat producers, not many in Canada should be some opportunities for the rest of the crop here. The Black Sea, this has been a huge topic and a co my colleague Kevin and I, we did a big report on the Black Sea situation six months from where it was in February. So we, I think it was released last month or so. So if you're interested in kind of seeing a big picture of what's going on there, I encourage you to check that out. But basically they're just not shipping the wheat or the corn or the barley that they need to be shipping. So Ukraine is the chart on the, my left, hopefully your left Russia the chart on the right and Russia's exports have improved, you know, 4 million tons are so a month, that's great, but we need more out of Russia, okay?
Rejeana Gvillo (20:31):
And so what we're seeing is that globally global wheat trade overall is down, not much, but it's down some from last year. And some of your top importers who do rely heavily on Ukraine and Russia just don't have the weed imports they normally would have this time of the year. So we're still waiting on these countries to come to other countries for, for wheat, the US and Canada being those of course most of the wheat coming outta Ukraine and Russia, not exactly a substitute for Canadian weed and vice versa. But we're just not seeing the interest yet particularly in the us and that's important to y'all because of Kansas City. Kansas City futures do tend to trade very very in tune with what's going on in the US hardwood winter week market. And one of the reasons that we've lost some steam in that market is because we are just not getting that export business that we thought would come to us based on what's going on in the Black Sea.
Rejeana Gvillo (21:24):
Russia, as you can see seasonally. So that black line is the five year average. Usually their weed exports peak right after harvest. Okay? They, their wheat mostly is winter weed. About two thirds is winter weed, about a third of spring. So exports normally are peaky and a couple months ago they tend to shut down more or less, or at least move a lot slower in the winter like y'all do. Okay? And so what we're gonna have to see outta Russia for the rest of the crop year is exceptionally high exports. We're gonna, you know, high relative to what they normally would ship this time of year, and we're just not confident that's gonna happen. So we're not sitting here and saying that wheat prices are gonna just take off from where they are today. There's a ton of volatility in that market and it's going to remain, right? They're, these markets are going to remain volatile for the next several months. I know we're up substantially again today, and we were down, I got lots of phone calls Monday while I was on an airplane. <Laugh> asking me why wheat prices were down so much. I, you know, I don't know Putin, what did he do? They're up today. So, so it's, it's all good. All goods in the world. This, these markets will remain volatile.
Rejeana Gvillo (22:33):
Old crop futures okay, are close to being fairly valued. All right? So I don't think winter wheated and spring, so I don't think we're gonna sit here and get a massive boost in any of these markets for old crop. What I will encourage you to do is to look closely at new crop values and consider making some sales because given these input prices and what we think is happening or did happen with the US and winter wheated acres, we're probably going to see a, a boost in North American wheated acres next year, including spring wheat. And we do think that Minneapolis is gonna come off the levels that it is trading at today for new crop versus new crop. So just keep that in mind. We communicate that with the team. But preparing for next year, I think that's something to to remember, global exports to date.
Rejeana Gvillo (23:24):
I touched on this with wheat and I just wanted to show you the canola or the rape seed chart. So the big exporters of canola us you know, Canada, Australia, Ukraine also exports it. Most of Ukraine's goes to the eu, but global exports of rape, seeded, or canola are down substantially to date. And most of that, I don't want you to look at this, this chart and get concerned about demand, okay? Cuz sometimes you'll, you'll be shown charts by various people in the industry and like, look, look, demand is bad. Look at trade. No, no trade is down because y'all's harvest in 21 was so light that you weren't exporting, okay? This chart goes through August of 22, which was before you harvested this year's crop. So demand is still good for canola and rapey. Global exports to date are, are down because of what's going on in Ukraine. And because y'all had such a light harvest, we're gonna look at this chart next year at this time it'll be a completely different story demand overall, again for canola we're not concerned about that. Australia does have a pretty big crop, so they will, they they're going to remain a, a competitor for the next 12 months at least.
Rejeana Gvillo (24:32):
So 23, this chart shows your acreage changes from 21 to 22. Okay? Red is lower, green is higher. So what did y'all increase last year? Y'all increased wheat acres, you increased oat acres, you increased corn acres, which of course, you know, not grown everywhere across the prairies. Small, small small corn acres there, but you cut back on canola, barley and peas. Now given that overall we are expecting a similar environment during the planning decision window, right? When you're thinking about penciling or when you're penciling in your crops, your decisions for next year, we don't look for a lot of changes versus where we were last year. Okay? So we are expecting overall similar patterns for barley, you know, the Australian producer, we were able to kind of figure out what they were gonna do because they followed y'all's footsteps, right?
Rejeana Gvillo (25:30):
They, they cut back on barley area, they increased weed area and canola area wasn't changed too much. And y'all gave us some insight on onto that. We think that we're gonna see a similar pattern again this year that y'all are gonna cut back on Barley area. It's, it's a, it's a little expensive. You're probably gonna cut back on oat area just because prices are so bad. We don't think that we're by any means buying an oat area at these prices. But we do think that we're gonna have an increase in wheat area, maybe not of this magnitude, but we may have another year of a increases in wheat area. So we put all that together when we think about canola. So canola next year, what are we gonna do? What's our marketing plan? I would say acres in Canada at this point we're expecting flat to lower given where prices are.
Rejeana Gvillo (26:20):
And overall not a big shift in prices. Okay? We'd have to get a pretty big cutback I think in canola area before we saw prices move a lot higher. I think canola futures in the 800 900 US dollar range. I know that's a wide range, but eight 50 plus or minus, I think they're about fair value given the global situation that we're facing today. So not a lot of upside potential without a production disaster, which at this point we're gonna be keeping our eyes on Ukraine. Most of their rape seed crop is planted in the winter. They're occupied right now, at least parts of the country is occupied. We suspect area is gonna be down for their winter crop. So barley, which is about 40% winter rape seed all winter, and then wheat, which is about 95 or so percent winter, those should all be down.
Rejeana Gvillo (27:06):
So that's gonna be a plus for y'all's barley, also for your canola moving forward. However we don't look for a massive boost in prices. Part of that tied to the big crop that we're ex the big bean crop we're expecting out of Brazil for wheat, we look for higher acres as I mentioned. And we do think this is going to pressure prices. We expect higher winter wheat acres in the us we will be conducting an acreage poll on that. So stay tuned and forgiven what that poll tells us. We will then of course share that with y'all and any market insights or steps we think you should take for that. But we do think acres will be higher winter wheat and spring in North America. So we are <laugh>, we are encouraging you. We're looking at securing some 23 sales already.
Rejeana Gvillo (27:54):
I don't know how many of you can lock in bases, but I know we've been communicating that with with our clients Durham area probably also higher. So I think it's gonna be hard to really get excited about that market moving forward. And remember if it's profitable for you, it's profitably profitable for everybody else in a northern hemisphere and possibly the southern hemisphere. So we're not the only people who are facing these prices and facing these input costs. So that's always something to keep in mind. Barley, lower again, higher input costs. We think we're gonna cut back again in Canada. We think we lost some area in Ukraine. So that'll be a plus. And then oats, just given where prices are today, we think that y'all are gonna cut back on acres, which hopefully will result in some higher prices this time next year, hopefully next year. This time we said bam, oat prices are great. We knew this, we knew this was coming <laugh>. All right, so with that we'll open it up for questions
Rejeana Gvillo (28:55):
Out of wheat into canola. I, so we're looking at the pattern that y'all did last year and that also that we saw in Australia. And input prices haven't shifted that much and wheat prices have come off. Now your cash price of course is different than, than the futures prices that we're looking at to determine this, but it's just looking at that, I think that, that we'll just see a, a bit more of a, a pullback in canola just on the input cost in general. But you know, we'll see where we are in six months. Do you think it'll be the opposite that will actually bring in canola area, are they? Yes. Yeah. Now you'll just come down to what pencils in best for for each farmer. So anybody else? I know Daniel's got a question.
Callie Luck (29:44):
<Laugh>
Rejeana Gvillo (29:45):
<Laugh>, you've been asking me questions all day. <Laugh>.
Speaker 3 (29:51):
So on your, so on your canola you're on the export side, the crushes are making really good bang now. So there's lots of seed that's gonna end up going there, but it's not gonna be able to hit the export mark market probably. So with that and with the drawing cart of it, it'll be interesting to see how the canola actually plays out from an ROI perspective and cutting back acres and whatnot. But with, you had mentioned about the, the peas in the lentil market, there's a hesitancy, it looks like that if you can make good bank on wheat and canola, why are they gonna see peas and lentils? Like what's your feeling on what's gonna happen with those acres?
Callie Luck (30:41):
Honestly, with that I would say I don't want to answer that for sure. I'd have to look into it. We have another specialist who we talked to about acres. But in general for P acres, I was gonna say we are thinking like similar acreage right now in the specialty crop pending next year with flax ballooning we could see those acres going down cuz we think there's gonna be carryover. Peas will be dependent on China too, right? So if they reenter this market or things change with their covid policy, then that could encourage acres. So we'll have to wait and see. It'll be more dependent too on what happens with like India as well for specialty crops. So that'll be something that will look a little later on and we'll have a better idea of it usually kind of into that like February march window we have a better idea of what happens and that's generally when buyers come back into the market.
Callie Luck (31:34):
So we'll see if we can see with red lentils especially like they haven't obviously been harvested yet in Australian stuff, so we're gonna see what happens with that. They do have a large crop and then a couple other places where they grow it. So we'll be waiting to see what happens with that. But so far our estimates from what we're seeing are fairly like flat for specialty crops. Otherwise, other than I would say like flax and then we do some other stuff with like canary seed and rye and that sort of thing too. So yeah. Anyone else have any questions? I know has anyone started thinking about 2022 yet? Have you guys made any sales? 23. Oh yeah, 23. 23. Has anyone made any sales? Oh yeah,
Speaker 3 (32:18):
Sorry, I was just gonna ask, the grain that's come been not coming out of Ukraine and Russia, you know like their exports are way down, but I'm assuming that's grain that's sitting there. How long can that grain sit before? Yeah, it's not really good anymore. And has that been factored into the market at all? That grain goes outta shape
Rejeana Gvillo (32:37):
Basically. So we need to think about a couple things. First, quality expectations from our viewpoint are gonna be different than quality expectations from other countries viewpoints, right? They're not gonna be quite the same. I think that gives Russia especially given the countries that tends to ship to a little bit larger window of potential spoilage than it would a US or a Canadian exporter shipping to Japan. Okay? however, Russia has had a wheat crop, not they're, some people are saying it's a hundred million tons, whatever, it's big 95 to 105, we don't know. They've had a very large wheat crop before it's been in the high eighties before I think it's been like 88 maybe. And so we know that they have some storage capacity for this. So it's not like they're sitting here in a situation that they've necessarily don't have any handle on at all.
Rejeana Gvillo (33:33):
Their storage capacity is probably maxed out. So I do suspect we'll have some spoilage. I'm not expecting that the spoilage to be enough to alter the situation that they're gonna have a lot of stocks left over from this crop. I think they'll still be able to ship it out. Remember China feeds wheated and we know how old the China's wheat stocks are, right? Sometimes they tell us that they're dust and again, Russia is shipping typically to poorer countries who I think will be okay with some quality deterioration overall. So I don't think it's gonna turn into something that will be a price advantage to us later, at least not in the next 12 months. Now if we're in the situation again post this next harvest, then yes I think that we'll be starting to enter into some dangerous territory. But I don't think that that's gonna impact us yet.
Callie Luck (34:24):
No. And where quality comes from, we obviously grow a lot of high protein, wheat, good milling quality. So with Australia getting rain, they typically sell a lot of mill quality wheat. So the rains over there are impacting that quality. But like she talked about with wheat over in Russia and Ukraine, we've even seen ships that were holding commodities move to different destinations cuz some countries wouldn't accept it, right? But it will find a home we just might not be where they thought.
Rejeana Gvillo (34:56):
To three months, yes, yes I can and we write about it usually on Fridays. LA Nina has been apparent for quite some time for an extended period. It is supposed to dissipate into the first few months in calendar year 23. So it's impacting right now the growing season primarily in Australia. That's one reason why they're so wet and why they have had record production seasons, I think three years in running. And then the opposite of course is the case for Brazil and Argentina where we have been seeing some dry weather. So at this point Argentina is dry, it needs water, there is no rain in the forecast. So we haven't started cutting back the corn and bean yield yet from Argentina, but I suspect that will be coming soon. Argentina is about half done planting its early corn crop and probably about 25 to 30% or so planted on bean crop.
Rejeana Gvillo (35:52):
So there's still time for those crops to improve, but the forecast is coming for La Ninaya to expand into the first few months of 23. So we should, we are expecting at this point losses for Argentina for corn and beans. We wrote an article on that on the intel page that talks about La Nina versus El Nino Nino versus neutral years and the what happens to corn and bean yields in Argentina and Brazil. So if you do have interest in that I encourage you to look at it right about a month ago. Anything else? All right,
Callie Luck (36:28):
I was just gonna add one more thing I would say for you guys, like Regina talked about our lookout, our lookout for next year for crops, if you're comfortable getting some sales on make those sales. But we also kind of are a full encompassed service. We do risk management as well, so there's always options if you're worried about production or something, we have hedging options where you can secure kind of a price floor and still participate in the market. So you can do that without delivery or you can deliver grain or commit to delivery and then still participate in the market as well. So very important to take, you know, to manage the risk on your farm and every plan is individual based on your needs. So come check us out at our booth and we can kind of talk about your farm and what your needs are. Yeah, thanks for having
Rejeana Gvillo (37:14):
Us. Thank you.
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Jan 09, 2023