The Good: The only agricultural commodity that had any type of positive move today was soybean oil. The soybean oil March contract moved up two per cent today while canola and soybean futures moved lower. The drop in canola futures combined with the increase in soybean oil prices have moved the canola crush margin moved up to C$104.11 per tonne from the C$76.25 per tonne that was posted last week at this time. The current move lower in canola prices is making it more profitable for crushers to continue to crush. This does not sound like rationing demand to me!
The Bad: The wheat market was caught by the downdraft of the oilseed markets with nearby spring wheat off six cents on the day. World cash prices continue to march higher as illustrated by the recent Algerian tender. Wheat prices traded at US$312 to US$314 per tonne CIF, which is about US$20 per tonne higher than the last tender at the end of December. Demand for wheat remains strong and today’s move lower should encourage more demand.
The Ugly: No question that the canola market was ugly today. If you have a glass half full view, the market finished the day well off the lows established earlier in the session. Canola closed the day at C$648.40 per tonne, which is slightly below the 20 day moving average. The overnight session is going to be critical in maintaining support from the 20 day moving average. A sustained breech of that level would open up a move to the C$620 to C$630 per tonne range.