Overnight Trade
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Overnight Trade

By Bruce Burnett
Minneapolis Canola
US $ per bushel C$ per tonne
Dec 9.82 3.9% Nov 909.10 0.8%
Mar 9.87 3.6% Jan 875.00 1.3%
Kansas City Soybeans
US$ per bushel
Dec 9.66 4.4% Nov 13.96 0.6%
Mar 9.63 4.2% Jan 14.08 0.6%
Chicago Dollar
US $ per bushel U.S. cents per C$
Dec 8.75 5.5% Dec 73.17 -0.5%
Mar 8.92 5.1% Mar 73.31 -0.5%
Corn Crude Oil
US $ per bushel WTI US$ per barrel
Dec 6.95 2.0% Dec 86.5 -1.6%
Mar 6.99 1.8% Jan 85.25 -1.6%

Sorry for the delay in the Daybreak today, but there were some technical issues today with the report.

Equity markets are expected to open lower this morning with the main concern being the U.S. Fed meeting later this week. The Fed will release their interest rate decision on Wednesday. The expectations are currently that the Fed will increase rates by 75 basis points, which will out them above the Bank of Canada rates. The loonie is moving lower this morning on this expectations with nearby futures trading at 73.17 U.S. cents. Crude oil is moving lower this morning which is also pressuring the loonie. Crude oil futures are trading at US$86.50 per barrel this morning which is down by 1.6 per cent.

Wheat markets are higher this morning on the news from Russia with nearby Minneapolis futures are up 35 to 37 cents per bushel. Winter wheat futures are even higher with Kansas City ip 39 to 41 cents per bushel and Chicago 43 to 45 cents per bushel higher. Corn futures are also supported by the news and are up 13 to 14 cents per bushel.

Canola futures are also higher in the overnight trade with the January contract up C$10.90 per tonne and trading at C$875 per tonne. The oilseed market is higher on the Russian news with soybean and palm oil up sharply on the news. European rapeseed futures are up by more than two per cent in the February contract which is also supporting canola futures. Soybean futures are up seven to eight cents per bushel in early morning trade.

Prairie Weather

By Bruce Burnett

This week will be one of transition in the Prairies as we move from fall into the early stages of winter. Temperatures are forecast to reach the upper single digits to low teens this afternoon. Temperatures will drop to the low single digits in Alberta tomorrow, while eastern regions will have one more day of temperatures in the upper single digits. Highs on Wednesday will be cool with temperatures mostly near the freezing mark with many northern locations not expected to get above the freezing mark. Temperatures will remain cool through the remainder of the week, while a reinforcing cold front will bring even cooler temperatures on the weekend. Winter is arriving on the Prairies this week.

There are a few scattered showers pushing across central Alberta and Saskatchewan this morning in advance of the low pressure system that will arrive in Alberta tonight. The low pressure system will move across Prairies tomorrow and Wednesday, bringing a mix of rain and snow along with the cooler temperatures. Amounts from this system could be significant with amounts ranging between 15 and 35 mm of water equivalent precipitation. Most of the precipitation will fall in the northern growing regions, but central and north eastern growing areas of Alberta will receive beneficial precipitation.

Long term forecasts point to unseasonably cool weather during the next two weeks across most of Western Canada. The cool conditions will also be accompanied by good chances of precipitation during the period, which increases the chances of snow arriving to stay before Remembrance Day. This pattern seems to be the arrival of the "La Niña" winter that will be around for the next two months. La Nina is still expected to transition to a neutral phase by late December.

Black Sea Agreement Cancelled

By Bruce Burnett

Remember that if Russian lips are moving there is a good chance they are lying. Russia announced that they are not continuing the UN/Turkey sponsored agreement that allowed for Ukrainian exports through the corridor. This has caused the futures markets to jump in early morning trade with Minneapolis futures up by 36 cents per bushel. This is not only impacting the wheat markets, but also moving vegetable oil markets higher, due to the expectations for reduced vegetable oil exports from Ukraine.

The most important thing to remember is that a lack of agreement may not impact exports to a great extent. Reports from the Black Sea this morning is that vessels are continuing to load and exit Ukrainian ports. The risk of attacks from the Black Sea fleet are more limited due to the presence of Ukrainian drones and missiles. Russia may not be in a position to threaten the grain shipments. They certainly could attack port facilities, but that threat has been present from the past three months.

UN and Turkey have indicated that shipments will continue and that an attack on commercial shipping is a violation of international agreements. The irony is that this entire war has been a violation of the UN charter. The main concern will be of commercial shipping will continue to do business in the region and how much insurance will cost for vessels to ship grain.

MarketsFarm is looking at adding to our wheat sales on the rally today as we do think that this rally is likely to be temporary before the traditional slump in prices during December. We are constructive longer term on wheat with winter wheat under threat in Argentina (old crop),  Ukraine and the U.S. Today we will monitor the markets and look for a Strategy Showcase today on our next moves.

Argentina plays a key role in the grain situation with the lack of Ukrainian supplies in the market. There were some rains in southern Argentina  last week, with parts of southern Cordoba and western Buenos Aires reporting amounts of 50 to 75 mm. The remainder of the main wheat growing regions in  Argentina received 10 to 25 mm. Despite the rains, MarketsFarm lowered our estimate of production to 13.5 million tonnes this week. This is slightly below the Rosario Grain Exchange estimate of 13.7 million tonnes and 3.5 million tones below the USDA estimate. The short crop in Argentina will force Brazil to turn to Canada, Russia and the U.S. to replace the Argentina's exports. Canadian business will be limited because Brazil will be seeking mostly lower protein SRW and Russian winter wheat quality.

 

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