The Good, Bad & Ugly

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The Good: The good news in the vegetable oil markets today was that soybean oil increased by 0.66 per cent to close the day at 50.38 U.S. cents per pound. The good news is that soybean oil has managed to maintain the 50 cent per pound level. This psychological level was first tested on the third week of September and the soybean oil market has closed below that level only four times since that date. This is providing significant support for the soybean oil contract, which seems poised to push out of this trading range to the upside. In order for the soybean oil futures contract to move higher, it must move through and maintain the 20 day moving average which currently stands at 50.73 U.S. cent per pound. There is also support from the overall global vegetable oil fundamentals which are expected to tighten this year.

The Good: Wheat markets were strong today with nearby futures moving up by 10 cents per bushel to close the day…

The Bad: Despite the strong performance in the soybean oil market, canola futures only gained C$2.50 per tonne during today’s trading session. The small gain resulted in a close of C$607.50 which is slightly above the average close over the past five trading sessions. This is bad news as canola futures are struggling to maintain the C$600 per tonne level despite the fact that canola harvest is nearing completion in most areas. Soybean futures recently are providing most of the drag on the canola market.

The Ugly: Spring wheat futures traded lower by 3.25 cents per bushel to close at US$5.67 per bushel today. The ugly news for wheat is that today’s close is hovering close to the contract lows set last week. Spring wheat harvest is essentially complete in the U.S. and Canada with export demand in both countries strong from Asia and Latin America. This is not translating into stronger prices due to record global production and pressure from feed grains (corn) markets. The ugly news is that this is seasonally the strongest time of the year for wheat prices and we are setting new contract lows.