The Good: Spring wheat had a positive day with the December contract gaining a whole 1.75 cents. This certainly did not break the downtrend established since the middle of June, but the early stages of bottom formation are underway. The key to spring wheat movement will be the USDA crop production report tomorrow. A bullish report would likely confirm the low and begin the slow process of turning the momentum around. With an increase in global wheat production tomorrow expected, spring wheat could use some good news.
The Bad: Well it had to happen sooner or later. The canola market crashed back to reality today as the nearby contract dropped C$4.50 per tonne to C$484 per tonne. This movement eliminated the gains of the last two weeks. Canola was hurt today by a stronger loonie and lower soybean oil prices. The lower canola prices have done technical damage to the recent uptrend and the action tomorrow will be important in determining whether the downtrend will continue. A close this week below the C$482 level would signal further downward potential.
The Ugly: Corn markets today were concerned about two issues today. The first was a drop of one per cent in the good to excellent condition of the crop. Now given the advanced stage of crop development, a one per cent change is not really an issue because the crop is still rated at 71 per cent good to excellent. The other issue was a large wind storm that swept across portions of Iowa and northern Illinois. The event is called a Derecho, which when I was going to school was named straight line winds. This event saw official windspeed of 75 mph to 96 mph in Iowa with some unconfirmed readings exceeding 100 mph.
The main concern about this event was that the corn crop is especially vulnerable to green snap (lodging) which causes a sharp reduction in yields. Every year there is some wind damage to the corn crop, but this system covered large area and losses will be significant. There is not going to be a shortage of corn this year so the windstorm is not likely to move prices significantly.