Glacier FarmMedia COVID-19 & the Farm



The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: For the second day in a row, the good news is related to a crashing oil price. Nearby WTI crude dropped below the US$80 per barrel mark as a neutral OPEC+ decision to keep supply increases to 400,000 barrels per day during December. The news that the U.S. government is considering using inventories from the Strategic Petroleum Reserve to help push prices lower today. Lower crude oil prices are also impacting the Canadian dollar, which closed the day at 80.25 U.S. cents. The lower dollar of course is beneficial for Canadian grain prices. The negative side to a weaker dollar is that inputs prices are also impacted by the lower dollar, making fertilizer and machinery more expensive.

The Bad: Well it could have been worse, but the nearby January canola contract dropped by C$12 per tonnes to close at C$978.70 per tonne. Compared with the carnage in the soybean markets, canola continued to outperform the soybean complex during trading today. Soybean futures were off 21.5 cents per bushel, while soybean oil closed below the 60 cent per pound level to close the day at 59.58 U.S. cents per pound. The world vegetable oil market is still tight, but slow soybean oil exports are pressuring prices.

The Ugly: There is no question that the spring wheat market has been a whole bunch of ugly during the past two trading sessions. The loses in the December contract over the past two sessions is close to 58 cents per bushel. There wasn’t any piece of information today that caused the move lower, which means that the move is likely due to fund selling in advance of the USDA report. A quick word to the market – the report will show that exports and domestic use are on track and supplies will remain tight until next harvest. Technical selling will not change any part of that equation!