$$June 19th MPUpdates – Canola Medium-Term uptrend broke on Thursday but along with other currently broken markets, it has rallied on the hope that the US Federal Reserve throws another Quantitative Easing program at the mess in the US and this will have a strongly positive influence on commodities. The US crop is drying up, and while this has been on the radar for some time and partially priced in, it along with the Fed meeting that ends today and deteriorating crop scores all pushed the Bears into covering positions. A broken chart remains a broken chart until it makes a positive breakout. Until it does, a nice set of prices are in front of anyone not caught up to our sales positions. We currently feel they are exactly right sized given current Canadian crop fundamentals which are not so Bullish given our stellar crop prospects. Targets expire June 25th. We believe it is in your best interests to be a maximum Plus or Minus 20% of our official Benchmark positions.
$$CanolaMPU(NewCrop) – Target $13.72 Sep Delivery {635-30Basis} on 15% to be 60% sold (22bu of a 36bu crop). Benchmark is 45% sold. At Current Sep $12.64, be 45+% sold. Current Bullish move is moving against a broken chart and is based upon a deteriorating US crop and the fact the US economy needs another stimulus plan which will drop the Greenback and inflate commodity pricing. The Canola crop in Canada remains potentially gigantic. There are debates on whether a ridge will set in this July and also on the final seeded acreage tally in the eastern prairies but hard to see the crop coming in light at this point. 45% is a good position to be in as we wait on the Fed announcement and the next few weeks of weather turmoil. $$CanolaMPU(OldCrop) – Benchmark is 100% sold. At Current Mar $13.94 be 100+% sold.
$$Gr.LentilMPU(NewCrop) – Target 24c on a #2 contract on 15% to be 55% sold (14bu of a 26bu crop). Benchmark is 40% sold. At Current 21.5c be 35+% sold. At 10 bushels sold we are in position now to wait on an acreage shave in the June StatsCan. Of course we needed both a June shave to go with a large April shave, but we’ll take what we can get as we try to slog our way through this oversupply. A few less acres printed and a price moving down towards a place where some additional demand can step in and we can then be mildly Bullish. With current crop prospects, Lentils remain profitable, so continue to maintain your sales position as your crop increases in size. $$Gr.LentilMPU(OldCrop) – Benchmark 100% sold. At Current 20.5c be 90+% sold.
$$Y.PeaMPU(NewCrop) – Continue to look for and take $7.50 on 10% to be 40% sold (14bu of a 36bu crop). Benchmark is 40% sold. At current Sep $7.40 bid be 40+% sold. Big Supply verse Big Demand usually plays out well for us over time. We are quite content with a 7-handle on our “off-combine” movement bushels we are sold to date but are looking for an 8 to 9-handle on bushels we move in the 2nd Quarter of the new year. $$Y.PeaMPU(OldCrop) – Benchmark 100% sold. At Current 7.37 be 90+% sold.
$$FlaxMPU(NewCrop) – Continue to take $13.18 Oct delivery on 10% to be 30% sold. (8bu of a 28bu crop). Benchmark is now 30% sold. At Current $13.18 be 20% sold. Flax acres are low but production will not be Bullish if current crop potential holds up against continued weak demand out of Europe. China has stepped in as a major player but their needs will be met by Ukraine production and won’t come to our pricing until the Ukraine runs out. We are therefore looking to hold 50-60% on that scenario playing out but knowing that we may be holding longer than we like. We have always maintained that Flax is grown best as speculative play with only an appropriate amount of acres dedicated to it. $$FlaxMPU(OldCrop) – Benchmark 100% sold. At Current 12.87 be 100+% sold.
$$ChickpeaMPU(NewCrop) – Target 38c (8.5mm) on 20% to be 35% sold (11bu of a 32bu crop). Benchmark is 15% sold. At Current 37.0c be 20+% sold. We are holding off further sales until we get through a critical phase of plant development though we are moving our finger slowly towards the trigger as we look for 37-38c pricing. If you are unsold to this point, we would be catching up at bids that are above our first 35c sale but not making new sales yet until we allow time for a trend to develop. Act of God clauses are important or direction on how the contract will be handled if grade specs are not met. Otherwise, there is little reason not to be 5 bu sold at this point, though we fear being any higher than 35% sold ahead of harvest. $$ChickpeaMPU(OldCrop) – Benchmark 100% sold. At Current 34.0c be 85+% sold.
$$Eth/Fd.WhtMPU(NewCrop) – Continue to take $5.50 Aug delivery on 15% to be 60% sold (40bu of a 67bu crop). Benchmark is 60% sold. At Current $5.50 be 55+% sold. Corn market has taken off on a dry scare that somehow caught the shorts unprepared. There will be massive US acres but the USDA overstated the crop potential right off the bat citing early planting as leading to a record yield. They have long held a linear view that early means bigger. Well in general it does, but not if early came because of dry. With that dry persisting, we have an interesting few more weeks of weather to see exactly how it plays out and 40% of our production just moved into the greedy bin. $$Fd/EthWheatMPU(OldCrop) – Benchmark 100% sold. At Current $6.00 be 100+% sold.
$$DurumMPU(NewCrop) – Continue to look for and take $6.85 #2 on 10% to be 30% sold (12bu of a 39bu crop). Benchmark is 30% sold. At Current $6.80 #2 be 30+% sold. North American crop will be huge and essentially a neutral S&D situation coming out of the Mediterranean does not support a move higher. A general market rally, especially a long term move by Wheat, Corn and Canola could give us a crack at $8 once again, but on it’s own, Durum is in rough shape. Many miles yet from the bin and quite a few issues to play out surrounding the new Canadian marketing paradigm but for the most part Durum will be a bit of a dud and may have to start pricing itself to lose next year’s acre battle before we are able to bottom and make a rebound. Remember, this is probably about 40% of your seeded acres this year. You may have to bite into prices you don’t like to manage your downside risk, because $5.50 and a dead break-even would taste pretty sour with $13 dollar Canola sitting there. $6.85 Durum should still put an easy $100 on the bottom line with current crop prospects and could still net you near $200 with the type of yields that probably put this market at $5.50.