The Good: There was a lot of bad and ugly out their in the markets today, but the Canadian wheat export statistics for week 25 were spectacular. A total of 611,500 tonnes were exported during the week with shipments from both West Coast ports and even some St Lawrence business. Durum exports were also strong at 177,800 tonnes for the week ending on January 24th. Canada shipped 789, 100 tonnes of wheat and durum during the week, which is significantly larger than their 505,800 tonnes shipped during the week ending on January 21st. Meanwhile, the spring wheat futures market dropped by 12 to 13 cents per bushel today. The export data is saying that Canadian wheat is “flying off the shelves” but the market feels that prices need to move lower. That is a head scratcher to say the least.
The Bad: Yesterday we discussed the large spread between the March canola contract and the May and July positions. The long awaited correction started today with nearby futures narrowing the spread by over C$12 per tonne to the May contract. The majority of the convergence has come in the March contract which settled just below the C$700 per tonne mark. As you can see from the chart below, there is still plenty of room to go over the next month to align the spreads. The only question is “will it narrow because of lower March futures or higher May and July values?”.
The Ugly: The corn market had a number of bullish numbers thrown at it before the regular trading session began. Corn sales overnight totalled 1.91 million tonnes. Weekly exports came in at 1.85 million tonnes with all of the business reported to destinations other than China. China has purchased close 3.7 million tonnes this week which will be in the report released next week. The market reaction was to move the nearby corn contract higher by a whopping 0.5 cents per bushel. At the same time, U.S. feedlots in the Southern Plains are struggling to purchase needed supplies for the next month. It is important to remember that the cattle on feed will be fed out to market weight and the demand rationing can only begin in the summer as the feed yards are generally booked for five or six months into the future.