The Good: The canola market tried a second attempt to test the C$650 per tonne level and briefly managed to trade higher until it dropped to close the day at C$645.90 per tonne. Stronger soybean, soybean oil and soybean meal futures supported the canola market. Despite the move higher in canola futures today, the relative value of canola dropped slightly when compared with soybean prices. Canola is still not being priced to ration export demand!
The Bad: The winter storm that moved through Western Canada in December also had an impact on the moisture situation in the Northern Plains. The north central areas of Montana picked up above normal amounts of precipitation over the past two months due to the track of the storm. North Dakota, eastern Montana and South Dakota were not as lucky with below normal precipitation so far this winter. Remember that the U.S. spring wheat crop is grown mostly in the eastern side of the Northern Plains. The moisture situation needs to improve in the second half of winter to provide some soil moisture for planting. Planting is only three months away in parts of the region.
The Ugly: The U.S. dollar continues to weaken as we move through the first week of 2021 and closed today at 89.43 points. This marks the lowest close of the dollar since the beginning of 2018. This support level set in 2018 is just above the 88 point level. The next area of support is in the 85 to 86 point range. The weakness in the U.S. dollar should stabilize when the economy begins to improve which is expected to be in the second and third quarters. The bad news is that the Canadian dollar will continue to show strength against the weaker U.S. currency.