The Good: Wheat markets ended the week on a positive note with nearby spring wheat futures closing up 4.25 cents per bushel to settle at US$6.26 per bushel. Spring wheat continues to bounce around in a channel between US$5.20 and US$5.30 per bushel. The past week has been a yo-yo affair for wheat as the markets bide their time before the USDA WASDE report on Tuesday. Unfortunately for the wheat market, the WASDE report is unlikely to make any dramatic changes to the world wheat outlook.
The Bad: Canola futures finished the day lower despite the Statistics Canada report this morning that confirmed that the stocks were the lowest since the 2012/13 crop year. The stocks in 2012-13 crop year were low because production was under 13.9 million tonnes. This year production is also lower than the previous year, but was still close to five million tonnes higher than in 2012-13. The biggest difference between the two crop years, is the demand for canola. Exports in 2012-13 were limited to 7.3 million tonnes by the lack of production. A bigger difference was the domestic crush which was 6.8 million tonnes in 2012-13. Domestic crush this year is likely to be a record at 10.2 million tonnes. This is the concern for the canola market – stocks are going to be very tight relative to use.
The Ugly: This current outbreak of cold weather is going to stock around for a while. The latest long term forecast calls for cooler than normal temperatures to remain into the third week of February. The coolest temperatures (relatively) will be in the Southern Plains and Corn Belt over the next 10 days. Markets other than natural gas need to pay attention. This is a hint for the Kansas City wheat market.