The Good: Spring wheat futures were strongly higher today with the nearby March contract settling at US$5.95 per bushel. This is not a contract high, but the move is certainly impressive given the market sentiment. Despite the move higher, spring wheat is certainly still the cheapest wheat in North American futures markets. The nearby March contract for spring wheat is still trading at a 44 cent per bushel discount to Chicago wheat. The March spring wheat contract has been trading at a discount to Chicago wheat since August 20th. Spring wheat needs to rally significantly in order to move away from being a Kmart blue light special!
The Bad: Canola markets finished lower today despite higher soybean, soybean oil and soybean meal futures. The move today pulled the nearby March contract off the market highs set yesterday. The drop in canola today is likely more a phenomena of lacklustre holiday trade than any change in the direction of the market. The relative value of the canola futures compared with soybeans has dropped over the past two weeks. Cheaper canola relative to soybeans is not the way to slow export or crush demand for canola.
The Ugly: The soil moisture situation across the globe continues to be quite dry in key growing areas. It should come as no surprise that soils are dry in South America, but other significant growing areas are also reporting poor soil moisture levels. The region from western Russia through Ukraine and into France are dry as we head into the 2021 growing season. The main central and northern Chinese growing regions are also reporting poor subsoil moisture levels The U.S. Southern Plains is also dry going into the winter growing season.