The Good, Bad & Ugly
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The Good, Bad & Ugly

The Good: The wheat market garnered most of the attention today, but oilseeds also reacted to the Russian indication that the grain export agreement was not going to be renewed. January canola futures gained C$14.90 per tonne to close at C$879 per tonne. Cash bids are currently ranging from 19.75 per bushel at eastern Prairie crushers to C$20.50 per bushel at western locations. The rally in canola moved the futures back to levels not seen since the beginning of the month. The bad news for canola is that the rally was muted when compared with the move in European rapeseed (up by more than four per cent) and the vegetable oil markets. This should provide further room for January contract to rally in the coming days.

The Bad:

Mansfield Energy issued an alert about diesel fuel shortages in several Southeastern states, including Alabama, Georgia, Tennessee, North Carolina, Virginia, and South Carolina. The company also noted “extremely high prices in the Northeast.” “Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast,” the company said. “These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges.” It noted that fuel prices are 30 to 80 cents higher than the posted market average due to “tight” supply, while saying that “fuel suppliers have to pull from higher cost options, at a time when low-high spreads are much wider than normal.” Fuel carriers are now having to go to “multiple terminals to find supply, which delays deliveries and strains local trucking capacity,” it said. While gasoline prices have dropped since they posted record highs in June, diesel hasn’t decreased nearly as much and currently stands at $5.31 per gallon, according to AAA. Oct. 21 data from the Energy Information show that the country had 25.9 days of diesel left.

 

The Ugly:  Crop conditions in the U.S. were released this week and the winter wheat crop is in trouble. The overall winter wheat conditions were only 28 per cent good to excellent versus trade expectations of 41 per cent by the trade and 45 per cent a year ago. The conditions in Kansas are even worse with only 24 per cent of the crop rated as good to excellent. The crop in Kansas is only emerged on only 59 per cent of the acreage as the calendar turns to November. This is not good news for the HRW crop in Kansas. Winter will soon arrive in Kansas which will stop active growth. Any wheat with poor root systems will then be vulnerable to freeze/wind damage. Subsoil moisture reserves are also very poor with 89 per cent of the state having short to very short moisture. The wheat market needs to begin to pay attention to the 2023 production prospects.

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