The Good: If canola is acting like a rocket ship to the moon, wheat is far more like playing a game of whack-a-mole. Whenever the spring wheat market attempts to cross the US$5.70 per bushel level, then the market whacks it back down. Despite starting lower on the open of the regular session during the past two days, spring wheat has managed to eke out a gain when trading closes. The nearby March 2021 contract closed today’s session at US$5.71 per bushel. The combination of higher futures and weaker loonie has pushed prices in the western Prairies above the C$7.50 mark in some deferred positions. That is until the whack comes during one of the trading sessions in the coming days!
The Bad: Global palm oil production is estimated to be six per cent higher in 2021 according to the Malaysian palm oil council. This sounds bearish for global oilseeds in 2021, before you look at the structure of demand. Palm oil ending stocks are projected to be down by 1.27 million tonnes at the end of the marketing year. A six per cent increase in global palm oil production equates to 4.5 million tonnes, which means that the net gain from the production increase is 3.23 million tonnes. Last year, total global use of palm oil increased by 5.28 million tonnes. This means that palm oil is likely to tighten in 2021-22, despite an increase in palm oil production.
The Ugly: The rally in commodity prices over the past six months has been aided by the weakening U.S. dollar. There is long term support at 90 points for the U.S. dollar level and the index spent all of one day below the 90 point mark. The dollar index is likely to trade sideways over the next few weeks, before mounting another test of the 90 point mark.