The Good: Canola had quite a week with the May contract closing at new contract highs of C$785.90 per tonne. The canola market was boosted by the soybean and soybean oil which posted gains of 1.4 per cent and 2.15 per cent respectively. The market is being supported by the weather developments in Argentina and Brazil, where too little and too much rain is lowering soybean prospects. The rains in Brazil are mostly hurting crop quality, but the dryness in Argentina is hurting crop prospects. The drought in Argentina will hurt the corn crop proportionally more than soybeans, but bean yields will also be hurt by the poor finish.
The Bad: Mato Grosso, the largest soybean producing state in the Brazil continues to suffer from persistent rains as farmers try to get the crop harvested and the corn planted. Soybean planting has hit 67 per cent complete mark this week. Normal progress is just over 80 per cent and last year was 91 per cent complete. It will take at least two to three weeks to finish off the soybean harvest in Mato Grosso this year. There is also a concern for corn planting as only 73 per cent of the crop was planted at the end of this week. This means at least a quarter of the corn crop in Mato Grosso will be extremely late and will mature in the dry winter season.
The Ugly: The forecast for Mato Grosso is calling for an additional 75 mm to 150 mm precipitation over the next week. This is not good news for the soybean harvest in Brazil The map below shows that most of Mato Grosso will receive heavy rains over the next 10 days. The rains should be good for the corn crop, but with only three quarters of the crop planted, the additional moisture will present a hindrance to the crop rather than being any benefit. Soil moisture reserves are good in Mato Grosso, but the ability of the tropical soils to retain moisture is limited. That means that most of the recent precipitation will not be around to help the crop in the dry winter period.