The Good: Canola wasn’t trading today, but the December soybean oil contract powered higher during the session and closed at the highest level since December 2016. This should support canola values tomorrow as the contract tries to catch up with today’s move in soybeans and soybean oil. The increase in vegetable oil prices are the result of the new numbers from USDA that indicated that global vegetable oil stocks are expected to drop to historically low levels.
The Bad: Corn was the driver of the rally in grain prices yesterday and the market clawed back some of the gains in todays action. The problem with the weakness in corn is that the negative move spilled over into the wheat market. The corn market is still near contract highs and the set back is likely to be temporary. The drop in ending stocks for both global and U.S. corn is likely to get tighter in the coming months as export demand to Asia continues to boost prices.
The Ugly: Spring wheat markets continue to churn around in the recent trading range as the market has trouble closing above the US$5.60 per bushel level. The nearby contract dropped today by close to seven cents per bushel. Spread activity has also been a feature of the trade in wheat today as the trade rolls positions into the March contract. Global wheat demand continues to be strong with Turkey announcing the results of their recent 500,000 tonne tender. Most of the winning tenders were priced between US$270 and US$275 per tonne c&f. Most of the Turkish tender is likely to be sourced from Russia and these values indicate that Russian prices are continuing to strengthen.