The Good: The July Minneapolis contract rallied by 42.5 cents per bushel today to hit yet another contract high of US$12.56 per bushel. The main reason for the rally is the persistent rain that is covering most of North Dakota and Minnesota (see the Ugly). The USDA report tomorrow will not give the market any new information on spring wheat, but will provide the first winter wheat production estimate of the year. HRW production is expected to be lower than last year by the trade, but MarketsFarm believes that the estimate will come in lower than trade expectations. With a HRW crop in trouble, spring wheat markets need to rally to ensure that a minimal spring wheat acreage is left unplanted this year. The only questions is, will Mother Nature allow this to happen?
The Bad: The spread between November ICE and Matif canola contracts narrowed today as European futures declined and ICE canola rallied. The Canadian dollar also rallied today, which caused the spread to narrow by close to C$17 per tonne. Canadian canola futures are still trading at a discount of C$69.41 per tonne when compared with the Matif contract. This is bad news for Canadian canola as it indicates that Canadian prices are becoming less competitive with European values. The good news is that ICE canola remains at a significant discount in new crop positions, which should help drive export demand, even with cash prices that are currently over C$25 per bushel.
The Ugly: The main concern in the wheat market today was the impact of yet another low pressure system forecast to move through the eastern Prairies. The map below shows the high definition NAM model run for the next 60 hours. The good news is that rains are are forecast to move into the central areas of the province, which desperately needed in the region. The bad news is that the central and eastern areas of Manitoba are expected to receive another 25 mm to 35 mm. Another system is expected to hit the Northern Plains