In the US we see Chicago soybean futures bouncing sharply higher overnight dragging both nearby rapeseed futures at Paris and ICE Canadian canola futures higher. With local canola basis at -$43.53/t yesterday there is a good chance we’ll see local values follow international values higher…….. am I the eternal optimist or what. Locally the trade have shown little interest in what international market indicators have done unless it is to use them to talk the market lower.
For instance yesterday I had a trader trying to tell me that the Russian wheat export quota and wheat export tax will drop the price of wheat globally. From what the market wires are telling me, the Russian farmer who had been refraining from the market in hope of higher values, has now moved into their domestic market as a seller, predicting the move will flatten domestic prices as Russian wheat stays at home. The tax, rumoured to be around US $27/t would in theory give the local market a buffer of US$27 over export parity. The move takes Russian wheat, or a nominal amount of it out of export contention by price or quota. How this will deflate the price of wheat in the short to mid-term is a hard yarn to spin. Possibly by the time we are moving through the Russian harvest in the middle of next year and they have higher carry in stocks on the books it may be viewed as bearish. We need to weigh that up against the deplorable state the Russian winter wheat crop finished up in autumn. Could it be the export restrictions are more to do with how the new crop is shaping up, keeping some old stock buffer, than it is to do with current domestic wheat prices in Russia, considering where they could be in May. Unless the Russian winter is mild and their spring forgiving we may be in for a bit of a roller coaster ride come March / April / May.