The Good: The nearby January canola contract recovered today and closed up C$2.90 per tonne and settled at C$1015.80 per tonne. Support today came from the soybean oil complex as nearby futures contracts closed up 1.67 per cent. Support also come from palm oil which traded higher on the day. The move higher in the canola market came despite lower soybean futures (down five to six cents per bushel) and European rapeseed values. The move today helped solidify upward trend in the canola market that started in September.
The Bad: The bad news is that the spring wheat market dropped again today with the December contract closing the day at US$10.15 per bushel. This was a bad day in the wheat markets, but spring wheat actually held up reasonably well as winter wheat futures dropped by 1.8 to 2.0 per cent. The positive news is that the spread between Minneapolis and Kansas City actually improved to US$1.94 per bushel. The spread has declined sharply since blowing out to C$2.79 per bushel last week. There is strong support for the Minneapolis – Kansas City wheat spread at the US$1.90 to US$2.00 per bushel level. All that is needed now is that the selling in wheat market stop soon as demand remains strong.
The Ugly: The pictures from the lower mainland of BC show the devastation of record amounts of rain that fell on the weekend. Amounts from the storm ranged from 133 mm at Vancouver airport to 294 mm of rain at Hope. The major highways from the Fraser Valley into central B.C. are closed, but more importantly, rail lines are also shut down due to landslides in the mountain. CN believes they can open their line within a couple of days, but the opening of the CP main line is still to be determined. One of the problems is the flooding in the lower Fraser Valley, which is interrupting service from the rail yards to the export terminals. In most years this would have a catastrophic impact on the grain industry, but this year should disrupt the export pace by a significant amount.