The Good: The rally in canola today pushed the March contract to a new high of C$997 per tonne. The nearby December contract closed below the all time high, but is still trading at a respectable C$1021.80 per tonne. The gains were supported by a 2.15 per cent increase in the soybean oil contract. Even soybeans managed to post a gain of 11 to 12 cents per bushel during the trading session today. The harvest delays in Australia are beginning to impact the canola market as Europe is counting on prompt delivery of Australian canola this year. MarketsFarm doesn’t expect quality losses in the Australian crop, but that could change if the rains persist.
The Bad: Spring wheat futures were up between 13 and 17 cents per bushel today, but the recent trend in the spring wheat market has been concerning. The momentum today was in the winter wheat contracts, which closed up 27 to 28 cents per bushel in Kansas City and 23 to 24 cents per bushel in Chicago wheat contracts. The relative weakness in spring wheat narrowed the spread between March contracts in Minneapolis and Kansas City to the lower end of the trading range at US$1.65 per bushel. The market needs to be reminded that spring wheat supplies are very tight this marketing year when compared with winter wheat.
The Ugly: The harvest in Australia continued to deteriorate with heavy rains reported on the weekend in parts of northern and central New South Wales. This supported the wheat markets as vessels are piling up on the east coast of Australia waiting for milling wheat supplies.. The heaviest rains were in northwestern New South Wales and totalled 25 to 50 mm across the region. There was also 10 to 20 mm that fell in central New South Wales. The ugly part of the situation is that the storm systems are expected to continue over the next week in the southern and central growing areas of eastern Australia. If this occurs, even more feed wheat will be produced in the main eastern growing areas of Australia. This is also an important producing area for malting barley, canola and pulse crops. The southern areas of eastern Australia are expected to receive between 25 mm and 50 mm during the next seven days.