Quick Market Update

US crops
Last week, crude oil prices approached the $100/barrel level, which helped push vegetable oil and soybean prices to new contract highs. Also, China has been an active buyer of US soybeans lately. Over the week, January soybeans gained 22 cents a bushel. A downturn in crude oil prices seems to be the only near-term factor that will stall the oilseed price rally. Soybean prices will continue to be supported by the concern of a rapid reduction in soybean stocks during this crop year, and the need for soybeans to regain acreage from corn in next spring's US seeding plans. Any developing concern over South American crop conditions will spur further price gains. Having said that, a large fund position in the market means that, at any time, profit-taking can lead to a quick, large price move lower. The market will be particularly subject to such volatility near a month-end or prior to a monthly USDA report.

Corn prices, which had seemed to be faltering after dropping below the uptrend set during October, traded sideways to higher last week. Following a record US corn crop, corn supplies have rebounded. Subject to actual South American corn production, world corn stocks next spring could reach seven-year highs. However, although there is a more comfortable corn supply-demand situation, corn prices are being supported by (1) higher soybean prices, (2) stronger US corn exports in response to reduced Chinese exports, and (3) fund buying. December 2007 corn futures gained nine cents over the week to close at $3.89, while December 2008 corn futures gained eight cents to close at $4.32/bushel.

US wheat prices, which had fallen steadily since the October 1 high, rebounded sharply last week. A frost in Argentina is believed to have caused some damage to their wheat crop. The US winter wheat crop condition rating has been dropping, and is currently rated only 45 % good to excellent, compared to a 57 % rating last year at this time. US durum exports rebounded last week to the highest weekly total in five years. Pakistan has purchased US and Canadian wheat. India is again tendering for wheat, is expected to purchase up to one million tonnes of wheat before the end of March. Over the week, December Chicago wheat gained 77 cents, December Kansas City wheat was up 80 cents, and December Minneapolis wheat was up 82 cents to close at $9.08/bushel. Of note is that new crop wheat futures prices registered new contract highs, with December 2008 Minneapolis wheat closing at $7.49/bushel, a gain of 37 cents.

Canadian crops
Last week, canola futures broke through what has been a price resistance level for several weeks. Inspired by strong world vegetable oil prices, and supported by export sales and continuing good crush margins, canola prices surged higher. January canola futures closed at $466.90, up $15.70 a tonne last week. Meanwhile, ample stocks in the commercial system have allowed buyers to weaken spot basis levels on this rally, with many bids now weaker than $40/tonne against January futures. Over the next month, commercial stocks are expected to be reduced, and basis levels should then improve. Deferred delivery contract bids continue to reflect "carry" in the futures market.

December barley futures lost $4.10/tonne to close at $178. Cash barley prices were more steady, with average Lethbridge-area cash bids around $187/tonne, so basis levels have strengthened. The CWB released their November PRO last Thursday. The Pool A feed barley PRO was left unchanged, but the new Pool B PRO came out $9/tonne lower than Pool A. That Pool B feed barley PRO converts to about $4.10/bushel elevator-delivered total return, but delivery may not be available until February. Meanwhile, imported US corn continues to displace domestic feed barley and wheat demand. The CWB lowered two-row malting barley PROs by $3/tonne, and six-row PROs were left unchanged. US malting barley prices have recently bounced higher, suggesting that the CWB may be able to capture some additional malting business at stronger prices.

Winnipeg December wheat futures gained $4/tonne in very light trade, and cash feed wheat prices were steady in the $4.60 to $5.80/bushel range. The CWB lowered wheat PROs for #3 and higher grades, while increasing PROs for lower grades. Edible pea prices have increased further, with yellow pea bids around $8/bushel and green pea bids as high as $9/bushel. Flax prices have also risen, with spot bids in the $10.50 to $12/bushel range. With grain prices relatively high, the price spreads between buyers are large, so producers should shop widely to find their best pricing alternative, while giving attention to reliability of full and timely settlement.

Prices and basis ranges
Barley
Spot - $187/tonne Lethbridge area, down $1/tonne from two weeks ago

Feed wheat
Spot: $168 to $181/tonne, up $4 to $5/tonne from two weeks ago

Rye & triticale
Alberta Distillers: not available
Elevator/feed bids: $159 to $181/tonne, unchanged to down $14/tonne on upper end bid

Peas
Feed peas: $4.10 to $5.00/bushel, lower from two weeks ago
Edible yellows: $6.50 to $7.00/bushel, steady to a bit higher
Edible greens: $8.75 to $9.25/bushel (Saskatchewan), higher

Oats (Edmonton area mills/elevators)
December $2.30 to $2.44/bu, 5 cents lower than two weeks ago
January $2.53/bu, 3 cents lower
February $2.54/bu, 3 cents lower
March $2.56/bu., 3 cents lower
April $2.62/bu., 3 cents lower
May $2.60/bu., 4 cents lower
June $2.57/bu., 3 cents lower

Canola - Bunge - Ft. Saskatchewan Forward Contracts (November 26, 2007):
Nov, 2007 $436.00/tonne, 33.00 under Jan/08 futures, basis unchanged from two weeks ago
Dec, 2007 $441.00/tonne, 28.00 under Jan/08 futures, basis $8/tonne weaker
Jan, 2008 $453.40/tonne, 26.00 under Mar/08 futures, basis $3/tonne stronger
Feb, 2008 $453.40/tonne, 26.00 under Mar/08 futures, basis $3/tonne weaker
Mar, 2008 $458.90/tonne, 30.00 under May/08 futures, basis unchanged
April, 2008 $468.90/tonne, 20.00 under May/08 futures, basis $3/tonne stronger
May, 2008 $465.70/tonne, 30 .00 under July/08 futures, basis unchanged
June, 2008 $465.70/tonne, 30.00 under July/08 futures, basis $10/tonne weaker
July, 2008 $458.00/tonne, 18.00 under Nov/08 futures
Nov, 2008 $452.50/tonne, 32.00 under Nov/08 futures, basis unchanged

Special crops:
Lentils #1 Lairds: 23 - 25 ¢ /lb (2 ¢ /lb discount for #2), unchanged from two weeks ago
#1 Estons: 20 - 21.50 ¢/lb. (2 ¢ /lb discount for #2), unchanged
Chickpeas: Desi 20 to 27 ¢/lb., unchanged
Kabuli (9mm) 30 to 35 ¢/lb., unchanged
Canary seed: 20 to 22.25 ¢/lb., a bit lower on top end range
Yellow Mustard #1: 45 to 50 ¢/ lb., strong & little changed
Brown Mustard #1: 32 to 40 ¢/lb., unchanged
Oriental mustard #1: 22 to 25 ¢/lb, unchanged

Livestock Market Snapshot

Source	Contract	This Week (end Nov. 23)	Last Week (end Nov. 16)	Last Year
USDA Hogs	3-area lean carcass 51-52 %	48.77	48.46	61.26
	Iowa/S. Minn direct /cwt.(dressed)	53.60	51.34	60.53
	estimated forward price/kg.	0.82 Dec	0.74 Dec	1.12 Dec
	estimated 3-month forward price/kg	1.04 Mar	0.97 Feb	1.25 Mar
Western Hog Ex.	Alberta weekly base cash price ($/kg.)	0.90	0.89	1.20
Market Lambs	95 -115 lb. $/cwt mid-point (Innisfail)	105.00	110.00	122.40
Canfax	Fed Steers Average - liveweight Rail - midpoint	81.22 131.65	76.39 127.00	86.77 144.12
	Fed Heifers Average Rail midpoint	80.24 131.90	76.55 126.90	87.22 144.00
	Currentness (AB) Y1 as % of total A kill (higher % implies more current marketing)	60.8	58.5	57.9
	5-6 weight steers (Alberta avg)	104.18	99.36	115.80
	8-9 weight steers (Alberta avg)	86.49	83.64	98.40
	Slaughter Cows D1-D2 (majority of trade)	20 - 35	23 - 37	24 - 32
	Slaughter Bulls	27 - 35	25 - 32	26 - 32
Canfax Carcass Info - Canada	Steer avg. wt. prev wk (2007 TD) Heifer avg. wt. prev. wk (2007 TD) Dom. Meat Production (million lbs.) Beef 2007 Totals (% of year ago) Pork 2007 Totals (% of year ago)	868 (839) 802 (781) 2251 (97) 3729 (97)	876 (838) 819 (780) 2203 (97) 3645 (97)	858 (839) 800 (778) 2329 (90) 3623 (98)
Canfax YTD sltr sales (Fed. insp) (carcass basis = 53 % total kill)	Steers (thous. hd) (% of year ago) Heifers (thous. hd) (% of year ago) Cows (thous. hd) (% of year ago)	1318 (95) 899 (95) 595 (102)	1295 (95) 877 (95) 581 (103)	1385 (83) 944 (85) 582 (127)
Est. By-product value/hd mid-pt.)	West	99.50	99.50	96.50
CME	CME Feeder Index	109.14	108.01	101.60
USDA	Choice 6-900 beef cutouts	148.55	144.07	142.15
	Select 6-900 beef cutouts	134.46	133.29	129.34
Hogs	CME lean hog index	49.40	48.50	61.01
	Pork carcass cutouts	59.10	58.05	67.27
	Ham select 17-20#	52	55	72
	Bellies 12-16# Midpoint	77	77	82
Turkey	Turkeys 8-16# (Hens)	95	95	101
Chicken	Broiler/Fryer - Composite Average	73.13	71.53	66.26
Basis-Fed Cattle	Nearby Futures(CDN $) - ABS Av	(14) vs Dec	(16) vs Dec	(13) vs Dec
Bank Prime Interest Rate %	Canada US	6.25 7.50	6.25 7.50	6.00 8.25

Livestock Comments

Thursday's US Thanksgiving holiday had US packers buying their fed cattle needs on Wednesday at $95 to $96, fully $2 higher than the previous week. Improved beef cutout values supported those packer bids. Based on placements into feedlots in the summer and fall, US slaughter-ready numbers are expected to decline into year-end just as meat demand improves. Near-term, this could translate into higher fed cattle prices, and more certainly so if stormy weather hits a major cattle feeding area.

Alberta fed cattle prices were $3 to $5/cwt higher last week, trading in a range of $76 to $84/cwt. Alberta feeder cattle price averages were quoted $2 to $6/cwt higher. The 500 to 600 pound steers traded in a range of $85 to $121/cwt, and averaged $104. The 500 to 600-weight heifers averaged $16/cwt back from the steers. Cumulative feeder cattle sales volumes remain below last fall's level, implying that producers are withholding cattle from the market. Whether that trend will change in response to improved prices and colder weather remains to be seen. For the week ending November 17, over 15,600 head of Canadian feeder cattle were exported to the US. D1/D2 slaughter cows traded in the wide range of $20 to $35/cwt last week. Most bred cows are selling in a range of $450 to $700.

US cash hog prices have improved. Although US hog prices are still well below year ago, considering that US pork output has averaged 7 % higher than last fall for much of the past two months, the situation could be worse. November 1st US frozen pork inventory is only up 2 % from last November, implying that pork demand must be strong. The weak US dollar could be a factor in promoting exports. Alberta's weekly average base hog price was $0.90/kilogram, up slightly from $0.89/kg. the previous week.

Other Related Links:

Alberta Agriculture & Food
Special Crop Market Commentary http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis5229?opendocument
Turf and Forage Seed Update http://www1.agric.gov.ab.ca/$department/newslett.nsf/homemain/fsu
Agriculture and AgriFood Canada (incl. forms) http://www.agr.gc.ca/index_e.phtml
Agriculture Canada - Market Analysis Division http://www.agr.gc.ca/mad-dam/index_e.php?page=intro
Canfax http://www.canfax.ca/
Kansas State Research and Extension http://www.agmanager.info/
USDA Statistics Services (e.g. crop/livestock) http://jan.mannlib.cornell.edu/reports/nassr/
Virginia State Extension (weekly report) http://www.ext.vt.edu/news/periodicals/roberts/