The Good, Bad & Ugly

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The Good: The good news today was that canola managed to close up by C$4.80 per tonne to settle at C$620.00 per tonne. The good news is that the November contract closed above the 20 day moving average which stands at C$614.36 per tonne. The two day rally has pushed canola to the highest close since the middle of September. This is good news for the canola market as soybean markets were mostly unchanged and soybean oil posting limited gains. Canola will need to rally significantly (C$20 per tonne) in the coming days/weeks in order to confirm the breakout from the current trading range. Support during the past two trading days have come from optimism for a resolution to the China-Canada tariff battle.

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

The Bad: Chinese imports of Canadian grain and oilseeds during August dropped dramatically from last year. The combined exports to China reached 243,100 tonnes which was the smallest in the past nine years. The irony is that China imported more canola in August (113,900 tonnes) than wheat or barley. The Chinese tariffs have impacted canola exports in September so these numbers are not going to get better in subsequent reports. Japan and Mexico have taken over the mantle of the largest importers of Canadian grains, oilseeds and pulses.

The Ugly: Wheat had another ugly day during today’s session with December futures settling at yet another contract low of US$5.51 per bushel. The contract closed down by three cents per bushel during today’s session. Kansas City and Chicago futures also traded lower today with nearby contracts down by 1.0 to 1.5 U.S. cents per bushel. The ugly news is that corn futures were up by three to four cents per bushel while wheat suffered losses across the board. Although spring wheat is eventually going to find a bottom, the current market trend continues to be lower, albeit at a slow pace. Wheat needs a bullish catalyst in order to move higher. The ugly news is that no such catalyst is visible on the horizon.