The Good: The winning streak in canola continued today with the March contract setting yet another contract high of C$1023.30 per tonne. The new contract high in ICE canola was impressive given that the European rapeseed futures closed down by 1.2 per cent and soybean oil futures were off by close to 0.9 per cent. The move in the futures market pushed crusher bids on the Prairies back towards the upper C$23 per bushel to low the C$24 per bushel level. Weather in South America continues to drive oilseed prices as drought conditions continue to place the soybean crop in southern Brazil and Argentina. AgRural, a forecaster based in Brazil, dropped their forecast for soybean production by 11.3 million tonnes to 113.4 million tonnes. If this comes to pass, that production level would be 4.6 million tonnes less than the 2020-21 crop.
The Bad: While wheat prices were dropping like a stone today, the drought monitor this morning indicated that the drought conditions in the western areas of the Southern Plains continued to intensify. Most of the wheat in Oklahoma, northeastern Colorado, and western Texas growing areas are now in extreme drought. Western Kansas moisture conditions are currently rated in moderate to severe drought. Approximately 80 per cent of the HRW growing area is in severe to exceptional drought. The market didn’t seem seem to care today as HRW wheat futures dropped 18 to 19 cents per bushel during the session.
The Ugly: The move in spring wheat values over the past two days has been very ugly as traders have liquidated long positions and have turned bearish on spring wheat. One of the catalysts today was a disappointing export sales report of only 756 tonnes of spring wheat booked in the week ending on December 30th. Now realistically one shouldn’t expect too much business in a three or four day trading week, but that didn’t seem to influence the market. Total spring wheat commitments are 4,24 million tonnes so far this crop year with only 5.58 million tonnes expected to be exported this year. This translates to roughly 60,900 tonnes of HRS sales needed each week in order to meet the export target.