The Good: Although the spring wheat market closed well below the session highs, it did manage to close up 6.5 cents per bushel from Friday’s close. The macro based funds tried their best to clobber spring wheat, but production concerns outweighed the selling pressure. The mere fact that spring wheat is a relatively thin market actually helped today as the big money doesn’t like to play in Minneapolis for fear of getting trapped in the trade. Winter wheat contracts were supported by other global issues as well, with smaller spring wheat crops expected in Russia and Kazakhstan.
The Bad: Macro based traders were out today trying to short commodities today as they hammered anything that looked like an inflation based trade. Soybean oil was clearly in the cross hairs of the fast money, which pushed the canola market down by just under the C$20 per tonne mark to close at C$898.10 per tonne. The only problem is that the weather has not improved for the canola crop and production levels continue to slip. This is likely a temporary speed bump on the way to rationing demand for the 2021 canola.
The Ugly: Don’t look now, but the spring wheat conditions dropped to 11 per cent good to excellent, which is very close to the conditions the crop was rated at in 1988. The big drop came in Minnesota, which was down 13 per cent to 15 per cent good to excellent. Montana and North Dakota dropped four and five per cent, respectively from last week. The drought this year will likely turn out to be more severe than 1988 so it does make sense that crop conditions are similar to that year. How low can crop ratings go? Washington spring wheat moved down one per cent to zero per cent good to excellent.