The Good: The wheat markets were on fire today as Chicago wheat futures jumped by over 23 cents per bushel in the September contract. The news that China was negotiating a purchase of a number of SRW wheat cargoes. This news, combined with increasing Russian FOB values on the latest Egyptian tender pushed futures sharply higher. Some of the increase was short covering as the Chicago wheat contract was net short by more than 33,500 contracts on July 7th. This rally is likely to be short lived unless the Chinese purchase is huge, but it is nice to see that wheat can stage actually stage a rally.
The Bad: The loonie traded over 74.41 U. S. cents today as the U.S. dollar moved lower against most major currencies. This pushes the loonie back to the upper end of the trading range established over the past three months. The concern is that the loonie may continue to strengthen, which would pressure cash grain and oilseed prices.
The Ugly: The Minneapolis market followed the Chicago futures higher, but traded only nine cents higher. This has pushed the spread between the Minneapolis and Chicago September futures to contract lows at a 25 cent per bushel discount. The movement in the spread has been spectacular over the past month as it has moved from a 39 cent per bushel premium to discount. The normal spread between Minneapolis and Chicago is typically 35 to 65 cents per bushel.