Glacier FarmMedia COVID-19 & the Farm



The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: Canola futures hit a new contract high today for the March contract at C$1012.90 per tonne. The entire oilseed sector rallied today as soybean and palm oil rallied during the trading session. Support came from the biodiesel sector today as crude oil futures were up by more than four per cent on the day. Cash canola prices are mostly in the C$23.50 to C$24.00 per bushel range in deferred positions at crush plants. With concerns increasing about the Argentine soybean crop it is important to remember that Argentina is the largest exporter of soybean oil in the world. Argentina is expected to export 6.26 million tonnes of soybean oil this crop year, that is if the 2021-22 production reaches close to 50 million tonnes.

The Bad: Natural gas prices in North America has been subdued by warm weather across most of the U.S. and eastern Canada. The current cold spell in Western North America is expected to remain contained in the region and spill down into the central and eastern U.S. This has caused the natural gas prices to drop dramatically this fall and early winter (green line). Natural gas prices are still significantly higher than the past few winters so it is natural to complain about the higher prices. If you want to see higher prices take a look at natural gas prices in Europe, more specifically the UK ICE gas futures contract. The contract is priced in GBP per 1,000 therms and the January contract rallied to close at a new record high of GBP 451.72. The price of natural gas in Europe is currently converts to over US$350 per barrel of oil equivalent.

The Ugly: The moisture situation in Argentina and southern Brazil is adequate for the growth of the recently planted soybean crops in the region. Argentina is just finishing planting the soybean crop as only 65 per cent of the crop was planted as of last week. The crops in southern Brazil are in the middle of the vegetative growth stage and won’t enter the reproductive stage until late January and early February. Markets are becoming concerned about the growing conditions in January for the soybean crop in South America. The current forecast calls for above normal temperatures and below normal precipitation over the next two weeks. Just remember that soybeans are a resilient crop and timely rains can boost production prospects rapidly in late vegetative growth stage.