The Good: The good news is that the 12:00 GMT model run did not differ significantly from the previous run with most of southern Saskatchewan and parts of Manitoba receiving between 25 and 50 mm. The one difference was that amounts for south central Manitoba were decreased with 5 to 20 mm expected in the current model run. The expected amounts in northern Alberta remained in the 25 to 50 mm range. This raw model output usually overestimates precipitation, so expect the 25 mm+ in the heaviest regions. This is good news as recently planted crops are in need of moisture to get them off to a good start. The market seems to feel that this is the end of the drought, but in reality another rain will be needed by the beginning of June. The growing season is a marathon and not a sprint!
The Bad: Canola futures were mixed today with the nearby July racing higher C$45 per tonne to close at C$916.80 per tonne. Stronger soybean oil futures helped push the nearby canola contract higher. This was not the case for the new crop November futures. They dropped C$7.50 per tonne to settle at C$734.70 per tonne. The good news is that the contract did see strong buying interest on the close. The obvious driver the of markets was the forecast for rains in the eastern Prairies. The board crush margin improved to C$151.92 per tonne today for the October soybean oil and November canola futures. No wonder crusher new crop bids reman the strongest across the Prairies.
The Ugly: Spring wheat futures were spanked hard today with the September contract dropping 25.5 cents per bushel to settle at US$7.21 per bushel. The market obviously was looking at the forecast as a game changer for the spring wheat crop, even though the forecast rains are still three days away. The market seems intent on pushing spring wheat futures back closer to Chicago wheat values. The September spring wheat to Chicago spread narrowed to 21.5 cents today. Spring wheat remains relatively undervalued given that the weather risk for spring wheat is still substantially greater than for SRW. The SRW wheat harvest is about a month away in the main growing areas of the midwest.