The Good: Pick any oilseed and you had a rally today as vegetable oils led the way. Nearby soybean oil futures were up by 1.2 per on the day which pushed canola higher. Canola futures remain slightly undervalued when compared with soybeans, especially after today’s modest move higher. Canola lost about C$1.00 per tonne to soybeans in relative valuation of the March futures. January canola futures finished up 0.45 per cent to C$596.30 per tonne, which is a new contract high. This leaves the canola market poised to take another run at the C$600 per tonne psychological level.
The Bad: Just in case you thought that wheat was going to push higher after last week’s rally, today brought you back to reality. The Russian ministry of the economy announced that a tariff of 25 euros is proposed for wheat exports from February 15th to June 30th. This should have been positive news for exporters from other countries, but U.S. futures markets decided it was bad news. Granted, the imposition of the tariff on February 15th, will give the Russian trade time to try and push out as much wheat as possible during the next two months. Internal wheat prices in Russia have already dropped and FOB values will likely follow with lower country bids.
The Ugly: Markets spent a long time last week debating the impact of the rains in Brazil. Mato Grosso, the largest soybean producing state received some good rains, but the total precipitation since September remained significantly below last year and normal. This December has certainly been mixed for the northern growing areas, but at the end of the day, rainfall is still in short supply. The early planted soybeans should be in the pod fill stage at by the end of the month in Mato Grosso. Rains are urgently needed to help maintain the yield potential of the crop. Unfortunately, Mato Grosso is expecting below normal precipitation this week.