The Ugly: Today is such an ugly day in the market that we will not try to sugarcoat it. It was ugly out there today. Leading the way was a sharp drop in soybean oil futures which closed the day off 4.7 to 4.8 per cent on the day. The May soybean oil futures contract closed the day at 50.46 U.S. cents per pound. If you are a glass half full sort of person there are two points that are positive. Firstly, the May soybean oil contract is still above the 40 day moving average, which is the next level of support. Secondly, the soybean oil contract is still posting a small gain when compared with the beginning of the month. Just keep on repeating that soybean oil is tight and the stocks at the end of the crop year will be only 23.3 days. That folks is less than one month!
The Ugly: The canola market followed the soybean oil market lower today with the July contract closing the day at C$687.70 per tonne. Unlike the soybean oil contract, July canola has pushed through the 20 and 40 day moving average. Obviously there is technical damage to the July contract although the selling pressure is not supported by the fundamentals. Canola ending stocks this year are expected to reach 500,000 tonnes by MarketsFarm, which is a 2.3 per cent stocks to use ratio. That works out to less than two weeks of supply. Just a friendly reminder that the crop year begins on August 1st not September 1st.
The Ugly: Spring wheat futures were lower today, which continues the five day sell off in the entire wheat complex. The fundamentals for wheat are less compelling than for the oilseed complex. Record global production is expected this year as the main growing areas of the northern hemisphere remain in good shape as the growing season moves into the critical stages of crop growth. The only concern for spring wheat happens to be the minor fact that extremely dry conditions prevail across the Northern Plains. The market remains convinced that rainfall will be plentiful in Canada and the northern U.S. this year. I wish that I was so sure about the upcoming weather in for the 2021 growing season.