The Good: Canola futures were higher today with the May contract closing at C$691.90 per tonne which is a new contract high. USDA provided some support for the soybean markets as they reduced the projected ending stocks to 120 million bushels. This was close to trade estimates and pushed markets up 13 to 15 cents per bushel. The real boost for the canola market came from the soybean oil market which was up 1.9 to 1.95 per cent in the nearby contracts. May canola appears to be poised to take a run into the C$700 per tonne plus range given the tight situation for old crop positions. This move would likely push cash prices in the western growing areas over the C$17 per bushel level for deferred positions.
The Bad: Spring wheat gets no respect and today’s trading action proves it! Nearby March futures were down by nine cents per bushel as the wheat markets followed the corn market lower. The move comes despite a drop in global ending stocks by close to nine million tonnes to 304.22 million tonnes. This ending stocks level is still a record, but China (51 per cent) and India (9 per cent) hold 60 per cent of the global stocks. I’m sure these numbers are totally accurate and all stocks will be available to feed the respective countries! The U.S. spring wheat ending stocks were reduced to 258 million bushels due to stronger exports and domestic use. These hardly seem like good reasons to push spring wheat futures lower than than Chicago or Kansas City wheat.
The Ugly: The corn market was smacked today because of a “disappointing” WASDE report. The corn ending stocks were reduced by 50 million bushels which dropped projected corn stocks to 1.502 billion bushels. The stocks to use ratio dropped to 10.3 per cent, which is lowest since the 2013-14 crop year. This doesn’t sound like a good reason to corn to drop eight cents per bushel on the day. The point is that USDA will likely move the ending stocks into the 1.2 to 1.3 billion bushel range over the next two or three months. The report to confirm the tight ending stocks will be the March stocks report which will give us a reading halfway into the crop year. The stocks report will be released on March 31st.