The Good: Canola futures hit all time highs today as both the March and May contracts moved higher.The March contract (aka the casino contract) closed at a new all time high for canola at C$753.60 per tonne. The more relevant May contract closed the day at C$717.60 per tonne which is a new contract high. The gains in canola came despite lower soybean and soybean oil futures. Relative canola values for the May contract moved to C$71.41 per tonne premium over May soybean futures. It is not unheard of that canola futures would trade at a large premium to soybeans, but the May contract is now about about C$15 per tonne above the long term average. The July canola spread is also higher, but remains a modest C$45 per tonne.
The Bad: No one can accuse the wheat market of being consistent. After roaring out of the gates on Tuesday, most of the gains were clawed back during todays session. This continues the sideways trend of the past month with March spring wheat trading mostly between the US$6.20 per bushel and US$6.40 per bushel range. Tomorrow we will see the initial outlook for U.S. total wheat acreage, which could provide some support for wheat. Otherwise, we will have to wait until the release of the March intentions report at the end of next month.
The Ugly: Input costs are becoming a concern as fertilizer values are moving higher and diesel fuel costs are certainly moving higher as we move into the spring. The freeze in Texas has reduced oil and natural gas output. This in turn has pushed crude oil values to contract highs. The interesting thing about crude oil futures is that a little less than a year ago, the expiring contract had a negative value. Now we are looking at values that are actually anticipating a full economic recovery during the next six months.