Glacier FarmMedia COVID-19 & the Farm

Experts

 

The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: Canola futures topped C$1000 per tonne for the first time in the January contract with futures settling at C$1004.40 per tonne. There is nothing magic about the C$1000 per tonne level other than it is a psychological level that has been traded only in 2021. There are a number of supporting factors in the move today from higher soybean and soybean oil prices to record levels for the nearby European rapeseed contract. The canola uptrend remains intact from the major pullback in September. Obviously prices can’t rise forever, but there is no indication that the nearby canola contract is going to break the trend anytime soon. Oh, and by the way, western Canada remains dry going into at winter.

The Bad: The main concern for commodity markets is the strong U.S. dollar as the dollar index moved up by 0.95 per cent on the day. Concerns about inflation pushed the dollar higher as it is expected that the Federal Reserve will have to move interest rates higher and sooner than expected.  The CPI report today indicated that inflation was up 6.2 per cent (yoy), which was higher than the markets expectation of 5.9 per cent.  In response, the central bank should boost interest rates earlier in 2022 than was expected before the numbers were released.  The on thing to remember is that the yearly high for the index is just under 103 points set in March. That leaves plenty of room for the greenback to move higher from the current 94.9 points. A higher U.S. dollar is not good news for commodities.

The Ugly: Speaking of dryness going into winter, the Canadian drought monitor released their map for the end of October earlier this week. If you were expecting an improvement in drought conditions across the Prairies, you would be very disappointed. The entire Prairie region ranges from abnormally dry to exceptional drought. The largest portion of the Prairie growing region is in extreme drought, which will have an impact on starting soil moisture for the 2022 crop year. Regular rains next year are going to be required to reach even average yield levels, let alone lofty trend yields.