Analysis Grains
Canadian grain growers caught between US and China
In Russia, the winter crops have never looked so bad at this time of year. The Russian Minister of Agriculture therefore expects that some crops will have to be replanted in the coming spring. The Canadian CBS released adjusted figures on the country's harvest yesterday. The biggest concern is with rapeseed. Despite the lowered harvest estimate, market players are more focused on the question now that both China and the US are threatening trade restrictions.
The December contract for wheat on the Matif closed €3.75 higher at €217.25 per ton yesterday. Wheat on the CBoT closed 1.6% higher at $5.46¾ per bushel. Corn closed 1.1% higher at $4.26½ per bushel. Soybeans also showed a gain, closing 1% higher at $9.93¾ per bushel.
The condition of winter wheat in Russia remains a point of concern. According to analysts at ProZerno, 37% of the winter crops in Russia are in poor condition or have not germinated at all. Last year, that percentage was at 4%. Since this statistic has been kept, the winter crops in Russia have never looked so bad. "It is difficult to make predictions about the upcoming harvest," Agriculture Minister Dmitry Patrushev told the Russian news agency Interfax. "We have just sown the winter crops and they are not in good condition. Replanting will be necessary."
Statistics Canada has slightly revised the total wheat harvest for 2024 upwards to 34.96 million tons. This represents a harvest more than 6% higher than in 2023, and the adjustment is in line with what traders had expected. The USDA, in the latest Wasde report, projected a harvest of 35 million tons. The canola yield, according to Stats Canada, is 17.85 million tons. This is slightly lower than the 18.51 million tons estimated by Reuters. In an earlier forecast, Stats Canada had mentioned a canola harvest of 19 million tons.
Dumping
Canola on the Canadian futures market has been under some pressure in the past month. This is mainly due to international trade relations. Canada took measures earlier this year against the import of Chinese electric cars. In response, China imposed anti-dumping measures on canola from Canada. The trade in canola between the two countries is worth about $2 billion. Just before Beijing's import restrictions, Chinese importers built up their stock positions, ensuring enough canola until at least February. Another trend that some analysts see is that Chinese canola processors are switching to soybeans.
For Canadian canola growers, the decline in demand from China comes at an unfortunate time. The newly elected US President, Trump, also plans to impose import duties on products from Canada. Canola oil, which is an important product in biodiesel (together with used cooking oil from China), could become too expensive for US customers compared to other vegetable oils. Some analysts believe that what China did with canola from Canada is a precursor to what soybean growers in the US may face if Trump continues with his plans for trade barriers against China.
