What We're Watching This Week - Oct. 31, 2016

A Mushrooming Shortage in the Keystone State:

FOOD

Few folks know that Chester County, in Pennsylvania, accounts for nearly 50% of total mushroom production in the United States. According to a harvest report from Produce Alliance, mushroom production in southeastern Pennsylvania is coming up short following a heat wave this past summer. As a result of this year’s production setback, US retailers may be forced to increase imports from other global producers. We queried the global trade landscape within Gro and found that while China was the world’s largest producer of mushrooms and truffles in 2013, two years later the United States’ top two foreign suppliers of mushrooms in all forms were Canada and the Netherlands. China was in third place. Given that USDA-NASS still forecasts that the producer price of the most common type of mushroom will decline by 3% this year, we will keep a watch on the monthly trade flow matrix and US wholesale prices in Gro to see if faltering output in the Keystone state has an impact on retail prices.

Canada and the Netherlands export the most mushrooms to the US

Colombia’s Coffee Harvest Update Is on Deck:

COMMODITIES

Brazil’s leading coffee producer, the Cooxupe cooperative, reduced its export outlook for 2016 by slightly over 10%. This was due, in part, to consumers in Brazil turning to arabica as a replacement for declining robusta supplies. On the back of this market shift, the key reference for arabica coffee (KC futures), soared to a multi-year high this week. Traders are pondering whether the benefits of a replanting and coffee rust prevention program will offset the impact of dryness during early flowering. For our part, we will be closely watching the October harvest report from Colombia, a leading exporter of arabica coffee.

Sugar Futures Stall Ahead of Monthly Brazil Sugar Update:

AGRIBUSINESS

UNICA, Brazil’s sugar association, is scheduled to release its bi-weekly production update today. According to a survey conducted by S&P Global Platts, industry analysts anticipate that the report will show that the amount of sugarcane crushed during the first two weeks of October dropped by 6.8% from the year ago period. Also this week, the Thailand Sugar Association predicted that the country’s sugarcane output will decline year-over-year by 3 million metric tons in the 2016-17 marketing season. Accordingly, the Thai government is working with growers and mills to improve productivity in order to prevent a similar drop in sugar production during the upcoming crush season. SInce the USDA still has the country’s sugar output slightly rising from the 2015-16 season, initial crush reports in November bear monitoring.

A Canadian Snowstorm Heats Up the Global Vegetable Oil Market:

CLIMATE

As of last week, 20 to 25% of the Canadian canola crop had yet to be harvested, according to CHS and agriculture.com. Parts of Canada received 15 to 18 inches of snow last week preventing growers from finishing the canola harvest in Canada and parts of North Dakota. Canola is known as rapeseed in Europe. Recently the European Commission's Mars agro meteorology division reported that dry soil conditions in France and Germany during the rapeseed planting window may hurt production potential in the region. With canola futures hitting a 6-month high this past week, we will be keeping an eye not only on Canadian weather forecasts, but also on the finish of the US soybean harvest (i.e. soyoil potential).