The Good: The canola market moved higher today with nearby futures up by C$9.60 per tonne to settle at C$659.80 per tonne. The gains in canola were supported by the second consecutive higher session in soybeans. November soybean futures were up by 12 cents per bushel and settled at 10.44 per bushel. Soybean oil futures were up by 0.56 per cent in today’s session while European rapeseed was up by 1.6 per cent. The elephant in the room continues to be the tariff situation with China imposing puntitive tariffs on Canadian imports. The fact that the nearby contract could rally in the face of this new reality was good news.
The Bad: The spring wheat December contract closed up by one cent per bushel to settle at US$5.96 per bushel. The bad news is that the contract tested the 20 day moving average again today (US$6.02 per bushel) but failed to hold those levels. This is the third session in the past four that has attempted to pierce and hold above the 20 day moving average. This means that spring wheat is destined to trade sideways for the next few days/weeks.
The Ugly: The CFTC data for the week ending on August 5 indicated that managed money funds had added 4,982 contracts to their net short position which was 22,703 contracts. This amounts to 114 million bushels net short the Minneapolis contract. The ugly news is that the fund short position is the second largest in the past five years. Funds remained record short the total wheat position for this time of year. The total wheat net short amounts to 160,635 (down 30,210) contracts which is the equivalent of 803 million bushels. Funds are definitely bearish wheat!
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