The Good: It wasn’t much, but the fact that March canola finished the day in positive territory was victory enough. March canola closed the session at C$687.80 per tonne. Soybean futures were down, as well as both soybean oil and meal futures. The only thing supporting canola was the Canadian dollar, which closed at 78.585 U.S. cents. The cash market for canola continues to be strong with old crop canola bids in deferred positions in the upper C$15 to low C$16 per bushel levels in the west and mid C$15 per bushel level in the east. Exports continue at a strong pace, which continues to support prices for canola, despite the drop in the soybean market.
The Bad: Soybean oil was crushed (pardon the pun) today as March futures dropped by close to three per cent today. The weakness in the soybean oil market is a worrying sign for canola as crush margins are deteriorating. Palm oil is the source of the weakness as bids have dropped in Malaysia as China has started to move purchases to Indonesia. This really shouldn’t have a big impact on global vegetable oil prices as overall demand hasn’t been changed.
The Ugly: Rains in Argentina yesterday fell in parts of southern Cordoba and western Buenos Aires with amounts mostly in the 15 mm to 25 mm range with some locally heavier amounts. There is a chance that the rains will continue through the weekend, but the models are currently indicating that amounts are likely to be light. Amounts mostly will be less than 10 mm across the region. Temperatures are expected to move back to the 30’s next week, with little in the way of precipitation. Given that soul moisture reserves are poor, crops will continue to be stressed in Argentina next week. The rains forecast on the weekend in Brazil will help stabilize crop conditions from Mato Grosso do Sul to Parana. The forecast precipitation in Brazil will help the soybean crops in the southern growing areas.