The grain markets heated up again over the past week.
Brennan Turner is a Market Analyst and CEO with Combyne Ag.
He says a number of factors have been impacting the markets lately from a shortened U-S trading week to the weather.
"We know that demand continues to be strong, that's a given. But, you know, with so much kind of riding on this current crop in terms of filling the supply pipeline back up and ensuring that we have inventories available for not just obviously, our domestic needs, but also our international customers. There's just amplified volatility, and so I think that until more about the current crop is known whether it be canola, peas, lentils, wheat, you name it, there's just going to continue to be some volatility in the market. So large in part there's also some fueling of the fire by speculators who are just watching these weather forecasts, these headlines. Just like we saw a couple of weeks ago when a major sell off happened, a similar run up over the next couple of weeks could happen, until there are some rain events. But bottom line is that a sell off could ensue, just like we saw in July 2017, just like we saw a couple weeks ago. So it's not like necessarily, we should expect these prices to stick around forever, but it's just largely a function of these weather forecasts that come and go."
He sees a positive market long-term for Canola.adding that old crop and new crop prices could start to converge as we get closer to the new crop coming off.
"The big reality is that everyone and their mother seems to be looking for a renewable substitute or alternative to conventional diesel. And biodiesel is obviously one of those great opportunities that not only soybean producers are kind of being able to benefit from, but also canola producers. So, you know, between the function of canola oil and canola meal, I think there just continues to be a very strong demand function for the oil markets. "
Turner has been bullish on oilseeds for probably three or four years now, and he doesn't expect that trend to reverse itself.
"So you know, net we're in a good situation for for canola prices. In my opinion, I would expect that all crop prices and new crop prices start to converge on one another, the closer we get to the new crop supplies coming off. But you know, long term outlook continues to be pretty positive for the oil market."
In his weekly report "Market Insider" for the Alberta Wheat and Barley Commission, Turner notes Wheat prices have rebounded on the weather.
" It's largely going to be a function of these weather patterns that we're seeing and trading there in. So I think, given the fact that we saw a significant decrease in spring wheat acres here in Western Canada, combined with some lower spring wheat acres in the US, there's going to be less available this year. On the flip side, we're already hearing reports of some below average protein from the US winter wheat crop. So Millers here in North America are going to have to substitute that or kind of do some some blending in order to kind of get to some of the protein levels that they're needing. So as a result, spring wheat looks to be in a pretty positive position. But again, a lot of this will hinge on the weather."
He says there's going to be a lot more wheat coming out of the world this year.
"Expectations are for a record year, Australia is looking pretty good, Black Sea and the EU are looking pretty good.
He expects to see some bigger numbers in the upcoming WASDE report.
He notes just given the fact that we continue to produce high quality products here in Canada, I think Canadian producers should be able to benefit from this.