Canada Markets

The December spring wheat daily and weekly charts may be sending mixed signals, while not convincing in either direction.

While the dry area of the prairies is seen shrinking in size, there remains areas that require precipitation. At the same time, the area facing excessive moisture is seen growing in size.

November canola futures failed at technical resistance above $480 per metric ton on Wednesday, a price level that has stalled an upside move over the past two months. July is typically a period of seasonal weakness and odds favor a move lower.

Canada exported the highest monthly volume of wheat to China seen in 12 months in May, while the USDA is revising that country's import potential higher for 2019-20 and 2020-21. This is taking place while stocks are also trending higher to record levels.

We look at the implications for crop year supplies for select Canadian crops when the recent Statistics Canada acreage estimates are plugged into AAFC's June supply and demand tables.

Agriculture exports were noted in Statistics Canada's May international merchandise report as contributing to the partial recovery in exports from the record plunge in April.

Corn prices slipped well-below barley prices since mid-May, just one source of pressure on barley prices.

On Monday, AAFC released revised planting intentions for the 2020-21 crop year on the Prairies. We look at the recent data.

May data shows canola continuing to be crushed at a rapid pace. The 2019-20 cumulative crush is ahead of the steady pace needed to reach the current AAFC forecast, while the crop year's total crush could be closing in on 10 million metric tons.

Producers have aggressively delivered dry peas into the licensed handling system over the first 45 weeks of this crop year, while as a percentage of supplies, this volume is well-above any other year in the past 10 crop years, based on current Statistics Canada estimates.

December spring wheat has shown bearish activity on the chart, while could be poised to test contract lows.

Feed barley prices delivered into southern Alberta remain high, although could soon reach seasonal highs.

Canada's licensed exports of all grain fell sharply in week 45, while on average, the trend in shipments through the last week of the crop year remains lower. Exports for wheat, durum and canola remain ahead of the pace needed to reach the most recent AAFC forecasts.

As of mid-June, the crop condition indexes for almost all Saskatchewan crops selected fell modestly but remain well above year-ago values as well as the five-year average for this week.

The spread between HRS and HRW has shown spring wheat strength relative to HRW, in the cash market as well as the nearby and new-crop December futures spreads. The continuous December spread is above its five-year average.

Data from Ontario's agriculture ministry would indicate that cash corn prices may be nearing a high for the year. This is consistent with DTN's seasonal analysis that indicates that nearby corn futures tend to reach a seasonal high in early June.

November canola breached resistance on June 12 and realized further buying interest on June 15, with price reaching a three-week high. Current prices face chart resistance.

Over an almost two-week period, the nearby spring wheat futures showed little change over the period while in Canadian dollar terms, closed lower, weighing on cash prices across the Prairies. A weaker basis over half of the Prairies added to the losses.

The USDA's June WASDE report could be viewed as bearish overall, with record stocks carried out of 2019-20 and production in 2020 forecast to exceed demand. The increase in forecast production across the major exporting nations remains modest for 2020.

There has been recent supportive fundamental data released for Malaysian palm oil lately, although the daily chart is showing the market pausing at chart resistance. Dow Jones commentary indicates all of the current news is priced into the market.