The Good: Canola prices continue to rise as record breaking temperatures cover the western Prairies and mostly dry weather continue to raise concerns about the production prospects for the crop. November canola closed the day at record contract highs, although the contract settled well below the intraday high of C$814.50 per tonne at C$794.60 per tonne. The Statistics Canada acreage numbers were close to market expectations with the canola area forecast to reach 22.48 million acres, which was up 949,000 acres from the April estimate. The higher area had no impact on the market today and the trade today was mostly focussed on yield prospects.
The Bad: Lytton, BC is trying to set another all time Canadian high, but may have some company as Ashcroft, BC is currently the warmest spot in the country. The warmest temperatures on the Prairies today is in eastern Alberta and western Saskatchewan with Drumheller currently at 38.5C and Leader posting 33.6C. It is difficult to believe that we are still a month away from what is usually the warmest part of the summer.
The Ugly: Spring wheat futures started the day off strong, but finished poorly with the nearby September contract down by 19.50 per bushel. The drop in the spring wheat prices came at the same time as the Kansas City contract finished the day unchanged from yesterday. There was no real fundamental reason for the drop in spring wheat as the forecast is calling for hot temperatures and mostly dry conditions for the rest of the week. The spread trade is likely the reason for the drop in Minneapolis as the September contracts had moved to a US$2.00 per bushel spread between Minneapolis and Kansas City. This is the upper end of the spread trading range and likely triggered some selling pressure/ unwinding of the Minneapolis – Kansas City bull spread.