The Good: The May canola contract settled down slightly today at C$801.10 per tonne, despite the best efforts of soybean oil futures to provide support. Canola is cruising along near contract highs and is trying to move towards the all time high that was set by the March contract. Soybean oil closed today up 1.37 per cent at 55.36 U.S. cents per pound. A long term chart of soybean oil is now approaching the highs set in early 2011. The all time high in the nearby soybean oil contract is 71.26 cents per pound that occurred in March of 2008. The USDA March WASDE report lowered the estimate of global soybean oil ending stocks by 51,000 tonnes. The world is hungry for vegetable oil and the soybean oil prices are beginning to reflect these fundamentals.
The Bad: The cold snap in the Southern Plains impacted more than the agricultural sector. Diesel stocks in the U.S. have plummeted since the event as U.S. refiners were forced to shut down in the Gulf Coast region. This has created a significant draw down in U.S. gasoline and diesel stocks over the past three weeks. U.S. diesel stocks this week dropped to 137.5 million barrels, which is close to six million barrels below the five year average. Although diesel production is expected to recover as refineries reopen, demand is also growing as the U.S. economy continues to recover.
The Ugly: The drop in the U.S. diesel stocks has an impact on North American prices. Canadian average wholesale diesel prices this week were 76.9 cents per litre which is up 12 cents per litre from last year at this time and 41.2 cents per litre higher than the low set in the spring of 2020. Diesel prices are likely to move to the recent highs set in 2018 as crude oil prices remain close to US$65 per barrel. Hopefully everyone has already filled up their tanks for the busy spring period.