Watching This Week: Canada's Grain Stocks, Argentine Corn, And California's Milk Production

TRADE

Canada’s Grain Stocks Are Shrinking:

Canada’s major cereal stocks and oilseed crops are projected to decline for the fourth consecutive year. Strong export demand and production setbacks are eating into domestic supply. Rapeseed oil inventories are expected to end the upcoming marketing year in healthy shape. However, current projections may not fully reflect recent production setbacks. Statistics Canada will provide fresh insight into the country’s stocks on Tuesday.

COMMODITIES

Will Argentina Plant More Corn This Season?

Buenos Aires Cereal Exchange expects growers in Argentina to plant 6% more corn acreage in the upcoming season. The area planted to corn also jumped last season after the government removed corn export taxes and restrictions. While US corn futures have plummeted this past month, growers are more concerned about downside to soybean futures. Further reductions to the country’s soybean export tax were delayed until 2018. Corn growers are also starting with favorable planting conditions. Traders can monitor daily precipitation and temperatures in Gro as planting progresses this month.

FOOD-BEVERAGE

California’s Milk Production Slows:

U.S. milk production was 1.8% higher year-over-year in July. In contrast, California’s milk production continues to decline, albeit at a slower rate. A hot summer reduced cow productivity in Northwest California. However, milk production in New Mexico, Arizona, Colorado, and Utah was up sharply in July. While colder weather is ahead for California, cow productivity tends to drop seasonally in September regardless of weather. As such, food retailers should keep a close eye on daily temperature and forage conditions in Gro. In some cases it may pay to source milk from surrounding states.​