The Good: Nearby soybean oil futures closed above the 70 cent pound level at 70.38 U.S. cents per pound. The last time that nearby soybean oil futures were this expensive was in early 2008. The strong soybean oil price have helped drive canola prices to record levels in both the futures and cash markets. Canola November futures closed the day at C$750 per tonne, which was up by 1.52 per cent on the day. Despite the strong prices for canola, new crop crush margins remain very strong despite cash prices in the C$16 to C$17 per bushel range. Crush margins calculated using the October/November contracts moved up by nearly C$13 per tonne to C$160.14 per tonne.
The Bad: Spring wheat prices traded higher today, but finished off the day considerably weaker on the close. Pressure from the winter wheat contracts and corn pushed spring wheat futures down to close higher by only 12.75 U.S. cents per bushel on the day. The September contract closed the day at US$7.8825 per bushel. The spring wheat futures are essentially going to trade weather forecasts until the next market moving reports – June acreage at the end of the month and crop production on July 12th when we will see the first USDA estimate of spring wheat production.
The Ugly: Highs in the Northern U.S., and Canada are usually set in the afternoon. The warmest temperatures in the spring wheat growing areas in North America were out in the PNW, where eastern Washington hit the low 40’s. Temperatures in southern Alberta and Saskatchewan, parts of Montana and southeastern North Dakota were mostly in the low to mid 30s. Crops will be stressed by these temperatures throughout that region. The problem (among others) is that the canopy in spring wheat crops is still undeveloped and the solar heat load on the soil surrounding the plants causes significant damage. High temperatures of 35C this time of year has a larger impact on crops than, when plants are more developed and a full canopy can trap moisture. This heatwave has only made the need for rains next week even more critical.