The Good: Boom! Canola futures jumped by C$12.30 per tonne today as the January futures closed the session at C$615.20 per tonne. The support in the oilseed market came from strong moves in soybean futures and soybean oil. Soybean oil futures are back testing the 40 cent per pound level with nearby futures at 35.9 U.S. cents. Canola demand remains strong with exports for the week ending on December 13th totalling 308,900 tonnes. That puts canola exports 1.37 million tonnes ahead of last year’s pace. The January contract is nearing first notice day and trade volumes will decrease next week as the Christmas trade doldrums set in.
The Bad: U.S. wheat exports were strong with HRS leading the way at 197,700 tonnes. This should be of no surprise as the futures market has made it the cheapest wheat among the U.S. wheat classes. Spring wheat exports included a 65,000 tonne sale to China, which helped support spring wheat futures. The wheat spreads in the futures markets continue to make little sense in the forward curve. July spring wheat futures (old crop contract) are trading at a 20.5 cent discount to a new crop July SRW (Chicago wheat). The market is pricing spring wheat like there are plenty of supplies with no demand. The supplies are there but demand for spring wheat is strong. Canadian CWRS exports last week (ending December 13th) totalled 398,700 tonnes.
The Ugly: Dryness in Argentina is beginning to slow soybean planting in southern Buenos Aires and Cordoba. This is only a few percentage points behind normal, but farmers in the dry areas are halting planting operations. Rains are urgently needed or soybean area will be reduced even further due to dryness. Farmers need to finish planting by mid January in order to harvest the crop before the first frost. Late planting is already reducing yield potential in the southern regions.