The Good: There was plenty of good in the markets today as corn decided to make a last ditch effort to buy acreage. This pushed wheat markets higher with Kansas City and Chicago winter wheat contracts leading the way. Spring wheat lagged the winter wheat futures, but the September contract managed to close at a new contract high of US$6.7375 per bushel. The strong carry in the spring wheat market has boosted new crop prices close to nearby offers in the Canadian cash market. New crop prices are getting close to/or above the C$8.00 per bushel level for eastern regions and closer to C$8.25 per bushel in the western areas of the Prairies.
The Bad: Ethanol stocks are tightening in the U.S. as gasoline demand increases and production remains constrained by strong corn prices. Ethanol production in the U.S. last week was 941,000 barrels, which was down from the past two weeks. Ethanol production is above the five year average, but the average has been constrained by the drop in production last year due to COVID-19.
The Ugly: Just in time for the beginning of the spring season, crude oil prices are beginning to move higher. U.S. crude oil stocks dropped 5.9 million barrels during the past week and diesel stocks were down by 2.0 million barrels. The reasons for the drop in stocks is the recovery of the U.S. economy which has increased domestic use. Unfortunately this means that farm fuel prices are going to remain high through the spring and summer season. Analysts are predicting that crude oil will average US$70.00 per barrel in the second half of the year, although we have heard that prices are going to increase many times over the past five years.