The Good: July canola moved above the C$800 per tonne mark today and managed to close at the C$807.40 per tonne. The July contract is in the process of becoming the nearby contract (aka canola casino) as the options expiry date for the May contract is on Friday and first notice day is at the end of next week. Cash markets continue to be very strong with bids in the June and July positions in the C$20 per bushel range across the Prairies. New crop cash bids also increased today with western regions reporting bids over C$15 per bushel.
The Bad: The Chicago corn wheat July spread continued to deteriorate as the value dropped below the 69 cent per bushel range. Basis levels in the July position are very strong for corn which has narrowed the cash spread in July to 40 to 50 cents per bushel in southern Illinois. The narrow spread will certainly encourage wheat feeding in the Southern Plains, but will also increase SRW feeding in the Mid-West and Delta regions. With these spreads, the U.S. poultry industry will likely be at maximum wheat content in rations until new crop corn is available in September. Corn rallied today on the news that Brazil is going to lower Mercosur tariffs for corn imports. This is the same country that is being called upon to save the world corn market with the safrinha corn crop.
The Ugly: The corn market was buoyed by the prospects for delayed planting due to cold weather. Here is the weather warning for central Illinois tonight with frost in the forecast. The prospect of cattle searching for electric blankets is very intriguing. I wonder what their Canadian cousins would think about running for cover when temperatures drop to -2C!