The Good: The canola market was lower through most of the day, but managed to rally during the last hour of trading to close the day up C$13 per tonne. The November contract settled at C$896.40 per tonne to close the day. Soybean oil was the main. source of support today as the nearby contracts closed up 1.2 per cent in today’s trade. A negative weather forecast contributed to gains in the soybean and corn markets which added to the bullish sentiment. The weather forecast for Western Canada is not positive with hot, dry conditions expected to persist this week. Canola remains in a sideways trading range over the past 10 days after hitting a peak on July 13th. The market is waiting for confirmation of the low yields expected this year, which will not occur until mid to late August.
The Bad: The spring wheat market has closed lower in five of the last six trading sessions. The spring wheat market is now taking its signals from the winter wheat markets as the current spread (US$2.40 per bushel over Kansas City and US$2.02 per bushel over Chicago) has been deemed to be wide enough to choke off demand. Export inspections last week in the U.S. indicate that spring wheat exports are beginning to slow with only 84,221 tonnes exported last week. HRW exports were strong at 310,695 tonnes this past week with the largest importer, Mexico, receiving 91,036 tonnes. Wheat sales have been relatively modest to date, but HRW sales should pick up as Latin American destinations look to replace spring wheat imports.
The Ugly: Although most of the attention in the U.S. drought in the Northern Plains has been focussed on spring wheat, many commodities have been impacted by the stressful conditions. Barley conditions in the U.S. dropped to 22 per cent good to excellent in the crop reports this week. Montana and North Dakota report barley conditions of just 10 per cent good to excellent, while Minnesota is reporting that only 15 per cent of the crop is rated as good to excellent. USDA estimated barley production at 114,287 million bushels in the July report, when the crop was rated close to 40 per cent good to excellent. The only barley in the Northern Plains that is rated as good to excellent are in the irrigated fields in Idaho, which is likely to be the largest barley producer of barley this year.