The Good: The casino that is the March 2021 contract remains open and continues see large amounts of volatility. If you are involved in a basis contract based on the March contract, please be aware of the risks that are ahead for the March position. The March contract settled up C$23.90 per tonne to C$715.50 per tonne.This allowed the March contract to close near the contract high of just over C$720 per tonne. It is extremely risky to play in the March contract as the volatility will likely continue to through the remainder of the month into first notice day. Pricing out the March position is likely to be the best course of action, if you want to sleep at night.
The Bad: Wheat markets were under pressure from two main negatives in today’s trade. The first negative was rain in the Southern Plains, that were viewed as a great benefit to the 2021 HRW crop. One could debate how much benefit the rains were given than most of the heavy precipitation fell east of the main wheat growing areas. The second concern was a drop in the wheat prices in Russia. The drop in prices was around five cents per bushel, so the markets overdid the move a bit to the downside. The spring wheat chart over the past two weeks has been quite volatile as corn markets continue to support wheat values. The downside pressure is from mixed wheat fundamentals as stocks are considered to be adequate to surplus.
The Ugly: The one negative factor in producing the 2021 crop will be the increasing input costs. WTI nearby futures hit new contract highs today as the oil market is beginning to push higher on increasing use and lower production. This means that diesel costs are likely to rise as we move through the crop year. MarketsFarm has already issued a fill the tanks alert in December, but if you have waited the market is telling you to do it sooner rather than later. The days of dirt cheap fuel are likely behind us until the next market crisis.