The Good: There was little in the way of good in the commodity markets today, but there was positive news on ethanol production in the U.S. today. The great February freeze-up dropped production two weeks ago to a low of 658,000 barrels. Production during the week ending on March 5th jumped back up to 938,000 barrels, which is close to the average production prior to the weather disruption. Concern continues that the tight corn stocks will force ethanol production to drop during the summer. Remember that we are only half way through the crop year for corn and stocks in the western Corn Belt are already becoming scarce. The corn market didn’t care today as it sold off 11 to 12 cents per bushel.
The Bad: Spring wheat didn’t have a bad day as futures dropped by only five to six cents per bushel. The spread to winter wheat (Chicago) narrowed today with the July contracts now showing a premium of just over five cents per bushel. This spread will eventually widen as the looming SRW wheat harvest will cause the spread to widen. The only problem is that we don’t know when the market will come to the same conclusion.
The Ugly: The May canola futures dropped C$19.50 per tonne today to close at C$776.70 per tonne. The drop in the canola contract was disappointing as soybean oil futures were just slightly lower in today’s trade. Canola futures are due to a correction, with the 20 day moving average still C$30 per tonne away at C$746.44 per tonne.