The Good: There wasn’t a lot of good in the agricultural commodity markets today as the speculators continue to sell off positions before the end of the month. The good news is today is that September soybean oil futures actually gained 1.67 per cent on the day closing at 60.61 U.S. cents per pound. The rise in soybean oil should have provided a boost to canola markets, but that was not the case. Canola crush margins improved on the day back close to the C$150 per tonne mark as November canola continued to move lower in the face of stronger soybean oil prices.
The Bad: Spring wheat markets were buoyed by the relatively poor condition of the crop outlined by the weekly USDA crop report. Only 45 per cent of the crop is in good to excellent condition, while North Dakota reported only 32 per cent of the crop in good to excellent condition. That should have been enough to push prices higher, but a major sell-off in the corn market pulled all wheat futures lower. Although crop conditions for the spring wheat crop are relatively low, the market has eliminated most of the weather premium in the spring wheat market over the past two weeks. The market still need to reflect the fact that rains of 15 mm to 30 mm across the Northern Plains and the Prairies is not enough to rain to dramatically improve soil moisture conditions.
The Ugly: The ugly move in the market today came in November canola, which moved down 1.34 per cent to close below the C$700 per tonne mark for the first time since the end of April. The widespread rains across Western Canada is one of the reasons for the sell off, but the negative tone of the ag markets in general were also responsible for the selling. The move lower in canola continues to fatten the crush margins for both domestic and international crushers. This should lead to strong demand for canola as soon as the 2021 crop is harvested.