The Good: Canola futures continued to rally today and have closed at levels not seen since January 2019. In case you forgot, that was prior to the imposition of the Chinese import ban on canola from two Canadian grain companies. The impressive part of the rally today was that canola faced headwinds from not only a strong Canadian dollar, but also lower soybean oil values.
The Bad: Lean hog prices dropped dramatically in today’s session, erasing the gains of the past five days. With higher corn prices, this move lower further extends the losses in the hog sector. Although export demand for corn is strong, the main demand sources for U.S. corn, livestock and ethanol, are in poor shape and increased prices will drive demand lower. Corn production is expected to be lower in the next USDA report, but consumption will also be lower.
The Ugly: The hurricane seems to long forgotten, but the storm is still churning through the southern U.S. with high winds and increasing amounts of rain. The storm totals have reached the 100 mm to 200 mm levels and are impacting growing areas from northern Louisiana to southern Missouri. This regions is a traditional cotton area, but also grows a significant amount of soybeans. Flooding is a concern in the region as most of the cropped area in the region is located in river bottoms. This leaves these fields prone to flooding. Just another problem with U.S. row crop production this year.