The Good: Well it was looking like an ugly day through most of the trading session. A rally in the last 15 minutes of the session allowed May canola to close at $739.20 per tonne. This was important as the contract was trading close to significant technical indicators for the session that would have opened up significant downside for the contract. It may seem hard to believe, but May canola finished the week higher by C$2.20 per tonne. Most of the downward action in canola over the past two days is likely due to the combination of first notice day for the March contract and month end for speculative trading positions. In some respects, the weekly increase in canola values are very impressive.
The Bad: Wheat futures finished the week in the red as the May contract closed down 10.75 cents per bushel to close at US$6.39 per bushel. The wheat market continues to trade in the US$6.30 to US$6.60 per bushel range. The downward move this week just pushes the May contract back down into the middle of the trading range. When wheat futures continue to threaten to bust out of the trading range, the market seems to quickly bat prices downward. Positive fundamental news will be needed to push the price through the current trading range.
The Ugly: Slowly but surely, ocean freight rates are increasing in the Pacific basin. The driver of the freight rates is the large demand from China for a wide variety of bulk commodities. Since the PNW is the closest port to Chinese (and other Asian demand) freight costs have moved up 5.9 per cent when compared with last year. The downside for farmers is that this will reduce the country elevator offers from grain companies. Most grain is offered on a CIF basis into importing countries, which would mean that FOB values at port and grain elevator bids will eventually move lower. The good news is that the change in freight quotes over the past two months is still relatively small.