High U.S. Dollar Weighing on Wheat Futures, While Canola Values Climb Higher — a Seeding Season Market Update with Brian Voth

Wheat futures have dropped sharply this week after spiking earlier this month, as the rising U.S. dollar is once again weighing on American commodities.

The currency effect is also being noticed in the oilseed complex, as Canadian canola futures have climbed while soybean values in Chicago have fallen over the last few weeks.

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As part of this interview, Brian Voth, senior market coach with Agri-Trend Marketing, discusses what’s been happening in the markets during the busy seeding season. (continued below)


As he explains, the slide in the wheat futures this week is related to the rising US dollar index.

Canola, meanwhile, is trending higher, with November futures trading as high as they’ve been in the last year. At the same time November soybeans have dropped fifty cents a bushel in the last two weeks.

“It’s the polar opposite of what we had last year, when we had the tightest soybean carryout in U.S. history and a massive canola carryout. Now we’re starting to see things come the other way,” notes Voth, pointing to new canola ending stock estimates from AAFC last week of less than a million tonnes this year and only 500 thousand at the end of the 2015-16 crop year.

November canola (black) and soybean (green) futures over the last two months (barchart.com)
November canola (black) and soybean (green) futures over the last two months (barchart.com)

Wheat and soybean values aren’t the only things dropping due to the higher U.S. dollar. The relative value of the Canadian dollar has inherently also declined, and is back down around 80 cents U.S.

“It looks like we’re ready to drop back into that range that we saw from January into April, trading about 78 to 80 1/2 cents,” he says. “I don’t expect it to go below that level.”

Finally, according to the Statistics Canada planting intentions report released in April, Canadian farmers were going to increase their oat acres by a whopping 30 percent over last year. Voth suggests actual oat acres will likely be smaller as the report and market’s reaction may have scared some growers who were on the fence about seeding oats.

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