To all our MarketsFarm readers – Happy New Year!
The Good: The spring wheat futures closed the year off just under the US$6.00 in the March contract. Wheat prices were supported today by good export sales during the past week with 259,003 tonnes reported by USDA. Results from the recent Algerian tender were US$17.50 per tonne higher than the mid November values, indicating that European and Black Sea wheat values are still on the increase. With world wheat supplies tightening from the major exporters and corn futures headed towards US$5.00 per bushel, spring wheat markets still have room to roam in the coming months.
The Bad: Normally a C$4.30 per tonne rise in the canola market would be a good thing. The bad part of the increase in the March 2021 futures to C$637.20 per tonne is that the increase barley kept up to the soybean values. The premium between canola and soybeans remains below C$25.00 per tonne which is C$30 per tonne below the long term average. Strong U.S. soybean oil sales last week and increasing soybean oil futures should be pushing canola to a significant premium to soybeans. The spread has rallied off off the ridiculously low values in November, but the canola market needs to rally versus soybeans to hit the normal price relationship to soybeans, let alone a premium.
The Ugly: The weather forecast for the next eight days in South America is calling for below normal precipitation over most of Argentina, southern Brazil and Uruguay. After a week of good precipitation in northern Brail, dry conditions are expected to persist through the coming week. Buckle your seatbelts for Monday, if the forecast continues to show drier than normal weather through the first half of the month..