The Good: The wheat mole stuck its head up for the trading session and was not hit with a mallet during the regular trading session. Nearby March spring wheat futures closed the session at US$5.80 per bushel and is now poised to test the October highs that were close to US$5.95 per bushel. Wheat fundamentals may not be as bullish as the oilseed sector, but strong demand continues to drive the wheat market higher. The port strike in Argentina is also a concern for the wheat market as exports are being blocked. This is the cutting off the main source of wheat for the second largest importer in the world, Brazil. This may lead to more North American wheat exports to Brazil this crop year. That certainly is worth a little boost in wheat prices, even if the mallet is poised to whack the market lower on any bearish news.
The Bad: Temperatures have not been a feature of the weather discussion in South America, but above normal temperatures have settled in over the main growing areas of Argentina. Highs today in central Argentina hit the 36C to 40C range this afternoon and the forecast is calling for much of the same over the next week. The combination of dry weather and above normal temperatures are causing significant stress to the soybean crop in Argentina. This is reducing the margin of error for the soybean crop in Argentina this year.
The Ugly: No way that you can sugarcoat the move in canola today, it was downright ugly. This move downward should be viewed with some suspicion as the drop in prices occurred at the same time that both soybeans and soybean oil futures continued to rally. Markets tend to hit air pockets during the holiday trading sessions and that is what canola hit today. What is puzzling about the downward move is that the November canola crush number from Statistics Canada this morning was a record 917,992 tonnes. High prices in November certainly didn’t ration domestic demand for canola.