The Good: Spring wheat started the day in a negative frame of mind as weak European wheat futures weighed on prices. The surprise is that wheat recovered and closed with a gain of four cents per bushel to US$6.25 per bushel. Don’t get me wrong, spring wheat futures are still trading well off the contract highs, but today’s action was technically supportive for the March wheat contract. A move lower today would have opened up a drop back to the US$6.10 per bushel level. U.S. export sales for wheat will likely be an afterthought in the USDA weekly report tomorrow, but the trade expects corn sales to hit a new weekly record. That should provide support for the wheat market tomorrow.
The Bad: The July canola contract was the only active contract posting a C$2.10 per tonne gain on the day. Before we go out celebrating the higher move, the July contract did manage to lose ground to July soybean futures. The spread closed below the C$20 per tonne level after briefly popping over that level yesterday. This is an indication that futures values in the deferred old crop months are still undervalued.
The Ugly: The Canadian dollar should be moving sharply higher as crude oil prices hit one year highs. Unfortunately no one told the loonie this news as it has traded in the 77.85 to 78.25 U.S. cent level for the past week. Loonie futures appear to be setting up in a 77.50 to 79.25 U.S. cent trading range. This stability would be welcome news for Canadian farmers, as the rally in the loonie since early November has certainly impacted farm gate prices. The good news is that the market rally and tight stocks have more than offset the rally in the Canadian dollar.