The Good: July canola futures are approaching first notice day and the market has moved back to levels last seen in the middle of May. With time running out and most of the commercial interest now in the November contract, any further movement in the July contract will be mostly based on the poker game of physical delivery. MarketsFarm issued a sales alert today as the July and November contracts hit our old crop target range. The general oilseed markets and canola both have potential to rally in the coming weeks as weather becomes the most important factor for the oilseed markets. This may present a good entry point for 2020 new crop sales.
The Bad: HRW wheat futures are plumbing contract lows as harvest progresses across the South Plains. Texas is 68 per cent complete which is 16 per cent ahead of average. Progress in Oklahoma and Kansas is 40 and 9 per cent complete, respectively. This has resulted in HRW wheat testing the recent contract lows that were established in mid May. The bad news is that harvest pressure will continue for at least two to three weeks as the combines move through Kansas. The pressure in the winter wheat futures will continue to be a drag on spring wheat. Quality of the 2020 HRW harvest is good and protein levels are close to the long term average of 12.5 per cent.
The Ugly: The number of COVID-19 cases world wide hit eight million today with the U.S. accounting for roughly one quarter of the cases. Markets are having a difficult time in evaluating the risk to the economy posed by the reemergence of cases. News that China reported an outbreak of new cases today and have instituted a partial lockdown of a neighbourhood in Beijing unsettled the markets. The U.S. Fed rode to the rescue by indicating that they were going to buy commercial debt, which helped the market recover the losses early in the trading session.