The Good: The good news today was that the November canola contract rallied today to close at C$660.60 per tonne. The move came despite lower soybean oil futures, which will reduce crush margins. Given that the October crush margin remained above C$120 per tonne despite the move in November canola. Spreads between the old crop contract (July) and new crop (November) remains quite wide at C$117.20 per tonne. The dryness in western Canada is still a very large concern and rains are urgently needed over the next few weeks to help get crops like canola planted into decent moisture. The forecast however continues to call for mostly dry weather for at least the next two weeks.
The Bad: The spring wheat futures had all the signs of being poised for.another rally today as support from the corn market should have pushed values higher. The drier than normal outlook for North Dakota over the next two weeks was also a supportive factor going into the trading day. The market decided that spring wheat was not all that bullish with the new crop contract trading at US$6.765 per bushel to remain unchanged on the day. At the same time the prospects for a frosty night in Kansas resulted in a two to three cent per bushel gain. At the same time, corn futures were up six to seven cents on cold weather concerns.
The Ugly: The Federal government released their budget today and the deficit is projected at a massive 154.7 billion dollars. The ugly part of the equation is that deficits are expected to remain intact through the 2025-26 budget year. The large deficit is a concern for the loonie, which has been strengthening. The only saving grace for the Canadian dollar is that the U.S. deficit will be even larger on a per capita basis. The debt to GDP ratio is expected to be 51.2 per cent in the 2021-22 fiscal year, which is up sharply from three years ago (2018-19) when it was 30.7 per cent.