The Good: Global oilseed markets continue to roll, with canola moving to values not seen since June of 2013. There are a number of reasons why the nearby January contract closed the session at C$623.80 per tonne. The first culprit is the soybean market, which rallied to close the day up 18 to 19 cents per bushel. Beans are not yet in the teens, but nearby contracts are now trading above the US$12.20 per bushel. Canola cash prices are also moving higher with cash bids ranging from C$13.50 in eastern regions to over C$14.00 per bushel in Alberta.
The Bad: One of the drivers of the oilseed market today was the dry conditions in South America. The models today remain relatively dry with below normal to normal rains expected in Brazil. Below normal precipitation is expected to fall in Christmas week across Argentina. There were some showers in Argentina today with western Buenos Aires and southern Cordoba receiving less than 10 mm from the system.
The Ugly: The funds that are short canola are feeling some pain, but the CFTC report today showed only 198 contracts (3,960 tonnes) were short on December 15th. Since the contract was trading just above the C$600 per tonne level on Tuesday, there is likely very little in the way of find shorts left in the market. Some brave souls may try to short the market at these levels, but the position could still be painful as the next technical resistance level for the nearby canola contract is around the C$650 per tonne mark.