The Good: It is all good today as futures markets reacted positively to the USDA report. Canola cash bids in Alberta have moved over the C$16 per bushel mark in some deferred positions. Nearby futures rallied by C$14.10 per tonne to 686.90 per tonne. Is the rally sustainable? As long as soybean futures continue to rally at a faster rate than canola futures, the rally is definitely sustainable. Today the relative price of canola dropped for the second consecutive day. The only fly in the ointment was that soybean oil futures finished the day unchanged.
The Bad: Spring wheat futures rallied today, but spring wheat futures finished the day well off of the market highs. Spring wheat futures had been gaining momentum this week as demand remains strong for wheat. U.S spring wheat ending stocks were reduced by five million bushels to 279 million bushels. The lack of performance with spring wheat futures today continues to assume that spring wheat area will remain relatively unchanged this spring. The U.S. spring wheat farmer in North Dakota is looking at cash (not futures) new crop prices of over US$11 per bushel for soybeans, US$4 per bushel for corn and less than US$6 per bushel for soybeans. What crops do you think the U.S. farmer is going to grow! In Canada we face the same issues with canola and wheat.
The Ugly: For cattle or hog feeders this report was the worst nightmare possible. Corn was locked limit higher from the report release though the end of the trading session. Corn is going to open higher in the overnight session, which will indicate how much pent up buying was left in the market. The bad news for the corn and hog feeders in Canada is that barley and wheat prices are also on the rise. The feed market suddenly became significantly more expensive for the next number of months.