Markets continue to show strength; Canada joins other WTO countries in commitment to maintaining strong global trade
USDA crop progress report for the week ending May 31, 2020 shows US spring wheat seeding progress reached 91% planted over the last week. This progress is still lagging behind the average. The 5-year average seeding progress for this week is reported at 96% for comparison.
The percent of the US winter wheat crop rated good to excellent was 51%, a 3% decrease from the previous week and lower than the 64% reported at this time last year. The US winter wheat harvest has begun in the Southern states, with total progress sitting at 3% harvested, comparable to the 2% at this time last year. While U.S. Wheat Associates has not yet reported any sample test results, early indications are that quality will be good with average yields.
This week, Canada joined other WTO countries in signalling a commitment to maintaining strong global trade during the pandemic. Canada joined the countries of Australia, Brazil, France, Germany, Indonesia, Italy, Mexico, Morocco, Peru, Republic of Korea, Singapore, South Africa, Turkey and the United Kingdom in a commitment to work together to co-ordinate on a number of measures including trade. The commissions have continued to ask the government to be an advocate of free trade.
The most recent announcement follows Canada’s agreement last month with 15 WTO members, including China, in creating a way for appeals to continue solving trade disputes, despite the formal body being unable to do so. Canada’s announcement was supported by the industry association Canadian Food Trade Alliance (CAFTA) which stated “Commitments to not impose new barriers, to not stockpile food products destined for export and to maintain open dialogue amongst global trading partners will ensure food prices and food security remain stable.”
The North American wheat futures markets continued to show improved pricing on previously reported weather concerns in Russia, Ukraine, Europe, and the USA. Dry conditions in these major export regions have resulted in lower new crop wheat production estimates. This has resulted in Minneapolis, Chicago, and Kansas wheat markets continuing an upward price trend.
Feed prices in Alberta continued the trend change noted last week, making small gains in value again this week. Forces holding up the prices likely include increased feeding demand from a backlog of cows waiting to be processed, pent up export demand of barley to the west coast due to rail disruptions earlier this year, and additional demand from China due to an 80.5% tariff on Australian barley imports to China for the next five years. Demand for malt barley continues to remain weak, as COVID-related closures continue to reduce demand for draft beer.
The Government of Alberta released an abbreviated seeding progress report only for major crops this week. As of May 26th progress is reported at 79.6% for the reported crops. Despite significant moisture events over the last week, all regions reported that spring wheat and barley planting progress increased. Year over year progress remains regional with Southern, Central, and North East regions showing progress ahead of average. Cool and wet conditions in the North West and Peace regions continue to hamper progress, resulting in these regions lagging behind their average progress.
For a further update on the wheat markets, see the most recent Market Insider article.Markets continue to show strength; Canada joins other WTO countries in commitment to maintaining strong global trade