The Good: There was little good in the ag commodity space today, but spring wheat did trade down less than the other wheat contracts. The close today for March and May spring wheat was down two cents per bushel, which helped boost the spread to Kansas City wheat back into positive territory. Make no doubt about it, a two cent premium between Minneapolis to Kansas City is not a sustainable state of for the Minneapolis contract as exports continue to pull supply lower. U.S. mill demand is expected to pick up for spring wheat in the coming weeks as old crop HRW supplies shrink under demand from the Southern Plains feed market. Demand for spring wheat is likely to remain strong into the new crop year. The question is “When will the market recognize it?”.
The Bad: The soybean markets were down today, although the deferred contracts were off by only 10 to 50 cents per tonne. When compared to the losses in the soybean contracts, canola was relatively unchanged. This allowed the spread between July canola and July soybeans to increase to C$20.70 per tonne in the favour of canola. Canola remains undervalued compared to historical normal which should support international demand for canola.
The Ugly: You don’t need to be a meteorologist to interpret the 250 millibar chart below. The predominate flow in the upper atmosphere on Friday will be directly from the North Pole. Unfortunately, it looks like this cold snap is going to stick around for at least the next week.