The Good: Wheat markets were not spectacular today, but at least spring wheat finished the day with its head above water. The drop in corn and soybean markets weighed on wheat markets, but spring wheat nearby futures closed the day essentially unchanged and settled at US$6.44 per bushel. Given the dramatic moves in the corn and soybean markets, the fact that wheat traded unchanged is a good thing! Wheat export inspections were 276,898 tonnes for the week ending on January 14th. U.S. wheat exports are now just over 425,000 tonnes lower than last year at this time. Compare that with the recent Canadian data that shows wheat exports over two million tonnes higher than last year.
The Bad: Canola futures dropped like a stone today as the market feels that recent rains in South America have improved crop conditions dramatically. MarketsFarm begs to differ – these rains may have stabilized the situation, but yield have not improved significantly. This debate will be played out in the next few months and today the bears had their day. Canola still has a demand problem in that exports and domestic crush are still running at an unsustainable pace for the available supplies. The market has responded to this by making canola cheaper!
The Ugly: The move in canola today was quite dramatic with the spread to soybeans now at levels we haven’t seen since late November. Currently March canola futures are only C$16.11 per tonne above soybean futures. The market is undervaluing canola relative to soybeans. Canola needs to rally relative to soybeans in order to correct this pricing anomaly.