The Good: Winter wheat prices were down today, but the spring wheat market showed some signs of life. The nearby contracts were up three to four cents per bushel which widened the spread to winter wheat futures. The spread between the September Minneapolis and Kansas City futures have widened considerably since the end of February. Part of the reason has been the improvement in soil moisture in the HRW growing areas over the past month, but the rally today was fuelled by the persistent dry conditions in the Northern Plains and Canada. With early spring wheat planting just getting underway in the U.S. and the southern Prairies, the market is beginning to reflect a weather premium for the spring wheat market. If conditions don’t improve in the coming weeks, the spread will likely increase back to the 65 to 80 cent range.
The Bad: Crude oil prices have dropped over the past week from the US$65 per barrel level back below the US$60 per barrel. This is good news for the price of diesel fuel, especially as U.S. diesel stocks have been increasing over the past three weeks. There certainly has been a drop in Canadian diesel fuel prices over the past four weeks as the wholesale values are currently 5.3 cents per litre below the peak price. The bad news is that prices are still over 21 cents per litre higher than last year at this time and over six cents per litre above the five year average.
The Ugly: The forecasts for precipitation continue to be light in the Northern Plains with the 8 to 14 day forecast from NOAA today indicating that most of the region will receive below normal precipitation through the third week of April. With subsoil moisture in North Dakota reported as 82 per cent short to very short and South Dakota modestly better at 73 per cent short to very short, the window for timely moisture before planting is beginning to close. One per cent of the spring wheat crop in Montana was planted at the beginning of the week, but subsoil in the Big Sky country is 71 per cent short to very short.