The Good: Ho hum, another record day another canola close at a record high in the nearby contract. January canola futures settled the day at C$1030.20 per tonne, which is a new contract high. Nearby canola has spent the last 10 trading sessions above the C$1,000 per tonne mark. It is a familiar story with canola being supported by stronger palm and soybean oil futures. European rapeseed futures were higher today, but unlike ICE canola, the February contract is rangebound and is trading about 24 Euros per tonne below the contract high.
The Bad: Canola may have moved higher in the nearby contract positions, but the calendar spread between January and November (old to new crop spread) widened out to nearly C$220 per tonne. This spread set a record of 237.20 per tonne on November 3rd. The positive news is that the strong inverse indicates that nearby demand is strong, but deteriorating values in deferred positions are worrying. The market should be putting a weather premium into new crop positions as most of the Prairies are still in the middle of drought conditions. Obviously the market feels that things are fine headed into the 2022 growing season.
The Ugly: It wasn’t all warm breezes and sunshine in the oilseed markets as soybeans seems to be resuming a rangebound trade pattern that is centred around US$12.70 per bushel. This is good news as it seems to confirm that the harvest lows were established at the beginning of this month. The concern is that the soybean market is only two months away from even more harvest pressure from a record Brazilian crop. It seems as if soybeans are putting in time before the next downward move. Brazilian crop conditions remain good with normal soil moisture levels present going into the critical reproductive growth phase. No wonder the spread between canola and soybean values continues to widen.