The Good: Chicago wheat futures moved lower today, but spring wheat managed to stage an impressive rally. September spring wheat futures settled up 10.25 cents per bushel at US$7.31 per tonne. The spring wheat market today decided to widen the spread to both Kansas City and Chicago wheat markets after underperforming in yesterday’s move higher. North Dakota, northern Minnesota and Montana remain dry, which helped support futures values. Wheat markets have been supported by action in the corn market, which was also higher today.
The Bad: The canola market dropped slightly (C$1.50 per tonne) today which paused the rally of the past eight trading sessions. The November contract still closed the day at C$692.50 per tonne. The canola market continues to closely track the soybean oil market and has not really added a significant weather premium for the dry conditions in Western Canada. The biggest concern for the new crop canola market is not demand, but the potential for supply shortfalls in the 2021 crop. There is a market for every tonne of canola produced next year!
The Ugly: The weather forecast continues to be ugly for southern and central Brazil with much below normal precipitation expected over the next week. This dryness is causing yield forecasts for the safrinha corn crop in Brazil to drop almost on a daily basis. This is pushing customers back to the U.S. with USDA announcing 336,000 tonnes to “unknown destinations” and 137,000 tonnes to Guatemala. Both sales were in new crop positions (2021-22). USDA continues to forecast a crop in the Brazilian corn crop of 109 million tonnes. The drop in safrinha production should push production down to the 100 to 105 million tonne range. MarketsFarm is currently forecasting a 101 million tonne crop for Brazil.