The Good: What a difference a day makes! Solid U.S. soybean exports combined with the losses over the past two days resulted in buying in the May contract. May canola futures closed the day up C$4.00 per tonne to C$688.50 per tonne. A chart for the May futures shows that we remain close to the contract high, which was set on Monday. Meanwhile, export shipments of canola remain strong, with 169,100 tonnes shipped during the past week. I don’t have to remind any regular reader, that canola exports need to be close to last year in order to maintain minimal ending stocks. As of week 27, canola is 1.67 million tonnes ahead of last year’s pace.
The Bad: Spring wheat futures spent most of the day on the positive side of the ledger, but selling later in the session pushed values down two to three cents per bushel. The surprising thing is that forecasts are now pointing to a winterkill event in the U.S. Southern Plains and parts of eastern Europe. This should have supported wheat values today, but the market still thinks that the risks are low for 2021 production. Its not like ending stocks of hard wheat (HRW and HRS) are not getting significantly tighter this year. The drop in U.S. hard wheat supplies is the highest since the 2002/03 growing season. Any changes to 2021 production prospects will we amplified by the big drop in ending stocks in the 2020-21 crop year. Theoretically, this should support HRS and HRW values, but the futures market currently does not agree.
The Ugly: The current forecasts are getting colder in the southern U.S. as the cold air spills into central Texas and states to the north. A freeway pileup in Dallas killed six people this morning due to icy road conditions. Wheat growing areas to the north are also getting cold with the biggest concern for in the HRW growing areas of western Kansas, eastern Colorado and southwestern Nebraska. Crops in this region were in very poor shape this fall due to dry soils and poor germination. The lows during the weekend are going to move into the -3F to -18F range for most of northwestern Kansas, eastern Colorado and southern Nebraska. There is some snow expected to fall, as the temperatures drop, but amounts will be minimal and the winds will be strong. Winterkill damage can occur with sustained temperatures close to 0F for most varieties growing in Kansas. This is likely to cause some winterkill damage to the fields that were not well established. Not to brag, but these temperatures are relatively warm compared with what we have been facing in Western Canada!