Glacier FarmMedia COVID-19 & the Farm



The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: The oat market is hitting rarefied air after yesterday’s Statistics Canada report. The price movement in oat futures (December) over the past two days has pushed values past the previous highs registered in 2008. December futures closed today at US$5.40 per bushel which was up by 24.5 U.S. cents from yesterday’s close. The long term chart below shows that the oat prices have moved well past the previous high of US$4.895 per bushel set in July of 2008. Although cash prices on the Prairies do not directly move with U.S. futures values, bids are currently moving higher on he Prairies as well. The market finally is beginning to respond to the fact that the oat crop wasn’t large enough to meet demand this year.

The Bad: All of the signs were in place for a good canola rally today. European futures were trading higher this morning on the news of the smaller crop in Canada, soybean oil futures were higher and futures were on a two day winning streak. Now you might say that canola futures had a good day with a gain of C$7.50 per tonne in the November contract, but I’m a glass half full kind of guy. Canola production was reduced by close to two million tonnes and all we can manage is a C$28 per tonne rally from Monday’s lows. MarketsFarm believes that canola price increases would be tied to advances in soybean oil, but this is a tepid response to a very bullish report.

The Ugly: The U.S. corn harvest is beginning to ramp up, but ethanol production has not yet ramped up with the increased new crop supplies. The weekly output was 937,000 gallons which is below the five year average of 1.0 million gallons. With crude oil prices continuing in the low US$70’s per barrel, ethanol production is still profitable, even at US$5.00 per bushel cash corn. Basis levels in the Corn Belt are dropping rapidly as the harvest advances with current corn bids dropping below the US$5.00 per bushel mark in Iowa and Illinois.