The Good: The canola market was lower today, but soybean oil and meal markets still managed to post gains in the session. The soybean oil futures were supported by increasing vegetable oil prices in China. The USDA reported a significant soybean meal today, which continued to support meal values. This is a good sign for the canola market as despite the lower close today, the fundamental drivers of value for the canola market (the meal and oil) have actually improved.
The Bad: The forecast for rains/snow in the main HRW growing areas in the Southern Plains this week pushed all three wheat futures sharply lower today. Rains in Argentina and Russia also provided an improved outlook for wheat crops in those regions. The losses today took out most of the gains posted last week. International cash wheat prices are still being supported by a number of recent wheat tenders. The latest wheat tender was from Pakistan, which is looking for 320,000 tonnes of wheat for January delivery.
The Ugly: Despite the drop in wheat prices, crop conditions released today indicate that the forecast rains are definitely needed in the Southern Plains. Kansas wheat conditions are 29 per cent good to excellent, which is the lowest ratings since 1985. Surrounding states are also feeling the impact of the dry conditions. Colorado is reporting 24 per cent of the winter wheat crop in good to excellent condition, while Texas has 37 per cent of the crop in the top two categories. Oklahoma is in the worst shape of the major HRW growing states with only 11 per cent of the crop in good to excellent condition.