The Good: Spring wheat moved sharply higher today with gains of 10 to 11 cents per bushel posted in nearby contracts. The rally in wheat has been driven by winter wheat contracts in Kansas City and Chicago, which are benefiting from declining stocks and higher international prices. Spring wheat has been the laggard due to the relatively large stocks of spring wheat this year. In trading today, spring wheat contracts temporarily became the cheapest wheat futures in the U.S. as the nearby Kansas City December contract moved above the Minneapolis futures. The trade was short lived and Minneapolis December futures closed the day at a five cent per bushel premium to Kansas City futures. A quick reminder that Kansas City and Minneapolis nearby futures are still between 58 and 60 cents per bushel lower than the nearby Chicago futures contract.
The Bad: Soybean oil futures were lower in today’s session which provided some headwinds for the canola futures contract today. The soybean oil contract were under pressure in sympathy with drops in the crude oil contract today. Crude oil prices are linked to biodiesel use and recent moves in the vegetable oil contracts have mirrored the trade in crude oil. Crude oil dropped today due to increasing stocks in the U.S. and concerns about the COVIDS-19 impact on economy.
The Ugly: The Canadian dollar rallied today, which also pressured the nearby canola contracts as nearby futures closed the day at 75.39 U.S. cents. After dropping below the 75 cent mark briefly last week, the Canadian dollar continues to move back to the recent trading range. The main cause of the weakness was the U.S. dollar, which has resumed the downward slide that began in June.