Plains, Prairies Quick Takes

Periodic Updates on the Futures Markets

July canola is up $16.10/mt with November canola up $14.70/mt, July soybean oil is up 1.76 cents/pound (with new contract highs for all three), August European rapeseed is up 3.25 euro per mt and August Malaysian palm oil is down .04%. July oats are down 6 3/4 cents/bushel. July crude oil is up $6.41 per barrel, July ULSD is up a very strong $.2413 per gallon, and the June Canadian dollar is down .00215 at .72320. The June U.S. Dollar Index is up .338 at 99.190 and the July Brazilian real is up .00060 at 0.19745.

Canola and soybean oil rallied sharply in early trading along with the same action being seen in energy markets. They have all pulled back slightly going into midday but remain very strong with July and November canola joining soybean oil in notching new contract highs on the move.

The catalyst for the latest rally was word out of Iran that they are breaking off all negotiations with the U.S. due to what they call persistent violations of the ceasefire agreement between Israel and Lebanon by the former against the latter. They have also threatened to "completely block" the Strait of Hormuz and even threatened to block the strait that allows passage to the Red Sea, the alternate route that is currently allowing Saudi Arabia to export crude oil through its overland pipeline. If the threats are carried out, it would surely have a lasting impact on energy (and related) markets to the point of likely causing a military escalation in the form of a response.

The remainder of the grain and oilseed markets have decided to focus instead on the lack of imminent threats to the U.S. crops and follow the seasonal pattern of selling heavily once planting is 50% complete with no serious threats on the horizon.

Outside markets are taking the deterioration more seriously with stocks giving up record overnight gains and turning mixed while treasury prices added to overnight losses. The U.S. dollar has added to overnight gains on the developing situation.

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