Harvest activities are just getting underway across the Prairies.
Grain Market Analyst Brennan Turner says he's not a big fan of selling direct off the combine unless you have to as prices are generally lower.
He says when it comes to the harvest the first few fields are usually pretty good, adding that some farmers have been pleasantly surprised by what the yield monitors are showing.
The first estimates from Stats Can are expected in a couple of weeks.
Meantime, when it comes to the wheat market there are a number of factors at play.
"To start with, the August WASDE report saw a lot of pretty big changes to the wheat balance sheet raising wheat production numbers in Canada and Australia. In Australia, wheat production estimates moved up about 3 million tonnes to more than 30 million tonnes of wheat, while Russia's wheat production was also raised by about 6.5 million tonnes. But on the flip side, you know, some bullish variables that I continue to watch is the heat and dryness in Europe.
Overall, Turner thinks it's a net positive report for wheat, as things just seem to be a lot more bullish.
"The flip side here is that we're about 30% off the highs that we saw in mid May. That's a function of just understanding what the size of this year's crop is going to be again. I mentioned a couple of those big harvests in Russia, Canada, and Australia, but those harvest supplies coming to market had buyers feeling pretty comfortable about getting their needs met.
Among some of the bullish factors to think about globally is the heat and dryness in Europe.
"The European crop is downgraded by about 2 million tonnes. The other dynamic is just the strength of the demand function. You see exports increased slightly, use consumption in China is increasing slightly. Maybe Russia will fill some of those voids, but the large majority of China when in terms of what they're importing from the likes of Australia, the US or even Canada is higher quality product that we produce here on the prairies."
He notes another area to watch is the wheat market in Ukraine and whether or not they'll be able to put in that fall rye/winter wheat crop."
"There are some significant financial hurdles for farmers there, let alone the labor challenges, the fuel challenges, and the crop input availability? So what Ukrainian farmers are basically facing in terms of how I'm understanding in talking to my contacts in Europe is that it's almost unprofitable in a lot of places to for them to seed fall barley or fall wheat."
Turner sees a lot of opportunity in the durum market, mainly because of some of the production downgrades in Europe.
"They're probably looking at about a 9 per cent drop, year over year, to about 7 million metric tons. That'll be the smallest durum crop in Europe in literally the last 25 years. In Italy the crop is expected to drop by about 10 per cent to about 3.5 million tonnes, which translates to a gap in terms of supply versus demand of about 2.6 million metric tons. They're going to have to import that from somewhere, and obviously look to the US, Canada. There might be some some options out of some of the Black Sea countries that have started to grow durum. Other places in Europe, but again, the crop has been challenged by drought conditions these last couple of weeks and months. So I think that's a net positive for durum."
He hasn't seen the markets react to this reality in terms of moving higher and feels we could see that begin in late September as some of those first boats make their way to international destinations.