Glacier FarmMedia COVID-19 & the Farm



The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: Spring wheat futures managed to eke out a gain of three to four cents per bushel today, which helped staunch the bleeding in the wheat contracts that began last week. The nearby May contract closed the day above the critical US$6.30 per bushel level which is a critically important support level. Wheat markets have been pushed lower by improving new crop prospects in the U.S. winter wheat areas, Europe and the Black Sea region. The bad news is that while wheat conditions are improving, soil moisture levels in the Northern Plains and Prairies remain very low, with planting just around the corner. The dryness is supporting the September Minneapolis – Chicago spread which has moved above 20 cents per bushel. If the market was really concerned about the moisture conditions in North American spring wheat regions the spread would be closer to 60 cents per bushel!

The Bad: Canola markets took it on the chin today as the nearby May contract dropped C$13.10 per bushel to close at C$782.80 per tonne. There are a number of rumours floating around in the market including supposed cancellations of Chinese cargos. The old crop canola market is now certainly in the silly season where rumours can move markets almost at random. The interesting point is that the soybean oil contract, which drives the value of canola, finished the day up over 1.15 per cent to close at 75.02 U.S. cents per pound.

The Ugly: Another rumour that impacted canola was that ADM and Viterra have purchased some Ukrainian new crop cargos for their eastern crush facilities. This rumour makes sense as new crop Ukrainian canola will be available in late July. Europe will purchase most of the rapeseed out of Ukraine, but the economics of new crop Ukrainian canola versus Canadian old crop likely work for the month of August only. New crop canola will move the crushers back to Canadian origin in September. The interesting thing to note is that the crush margins for new crop Canadian canola are running extremely high levels with October-November margins currently at C$147.94 per tonne, which is almost double last year at this time. This shows that the Ukrainian cargos are likely for August delivery only as Canadian new crop is priced very attractively.