The Good: Even though the eastern Prairies are still waiting for the forecast rains, central and northern growing areas Alberta received 15 to 45 mm of precipitation (rain and snow) over the past 24 hours. This is the second week in a row of beneficial precipitation for the regions and drier weather would be welcome to finish off planting in the region. The cold front associated with this system is currently moving through Manitoba, kicking up some thunderstorm activity. The next system will move up from the south and will provide rainfall for most of the southern and eastern Prairies. Let’s hope that those rains are as good as the precipitation was yesterday in northern Alberta.
The Bad: The three day rally in July canola was stopped in its tracks by the “sell everything” risk off market in commodities today. July canola futures closed the day down C$9.90 per tonne at C$933.20 per tonne. The drop in canola was actually modest when you compare it with soybean or soybean oil futures. July canola remains a casino contract with high volatility expected in the contract for the next month. Participation of the commercial accounts is limited, leaving only funds and speculators to sort out what the value of the futures. The ultimate direction of this contract will likely be driven by soybean oil futures in the coming month.
The Ugly: Soybean oil was taken out today and beaten with an ugly stick. The July contract closed down 3.2 per cent at 66.47 U.S. cents per pound. The door today nearly erased the gains of the past three sessions, but remain well above the 20 and 40 day moving averages. The sell off today was more indicative of selling in the outside markets rather than any fundamental change in soybean oil. World vegetable oil situation remains very tight and soybean oil values should continue to reflect this situation. This is good news for the canola market.