Ontario wheat prices reached 52-week highs as the market incorporates a risk premium due to the uncertainty in production. Statistics Canada said Ontario farmers plan to increase corn acres by 5.4 per cent this spring; soybean acres will be similar to last year.

The world is no longer comfortable with past stock levels of grains and oilseeds. The ongoing Russia/Ukraine conflict, escalating tensions in the Middle East, and China’s heightened frustration over Taiwan have major importers increasing stocks for food security.

Quick look:

Soybeans: Ending stocks have been at historic lows in Ontario.

Corn: Ethanol plant bids have hit three-year highs.

Wheat: Ontario winter wheat planting in 2025 was down versus the previous year.

Soybeans

Ontario farmers plan to seed 2.9 million acres of soybeans this spring, unchanged from last year, according to Statistics Canada. Using an average yield of 50.6 bushels per acre, production has the potential to come in at four million tonnes, up from the 2025 output of 3.6 million tonnes. The year-over-year increase in production comes on the heels of historically low ending stocks in Ontario.

Commercial stocks in Ontario are declining, and the market will function to encourage imports moving forward. Bids from the domestic crusher in Ontario need to be $0.50-0.75 per bushel to higher to attract supplies from south of the border. Domestic crush margins are at three-year highs, so there is breathing room for stronger cash bids.

On the world market, Brazil’s soybean harvest progress has moved past the halfway mark. Argentine farmers will begin harvest in the latter half of March and move into high gear during April. Brazilian soybean offers in export position are US$50 per tonne discount to U.S. origin.

U.S. farmers are expected to increase soybean acres by four to five per cent this spring, according to the USDA. That increase may have influenced Ontario farmers rotational plans.

Soybean futures reached 18-month highs during the first week of March. While the futures markets surged, basis levels deteriorated. This was largely fund buying. As of March 10, we estimated that the non-commercial position in the soybean futures was near 250,000 contracts, which is a historical high. When the speculative trade is this large, the market tends to decrease.

This week, we’re advising farmers to increase sales by 10 per cent, bringing total sales to 80 per cent for the 2025 production. We’ll save the final 20 per cent increment until the upcoming crop is more certain. When we see Canadian imports from south of the border increase, this will be the top in the Ontario soybean market.

Corn

Ontario farmers plan to plant 2.3 million acres of corn this spring, Statistics Canada estimated. This is up from 2.2 million in 2025. Using a traditional abandonment rate and an average yield of 174.2 bushels per acre, production has potential to reach 10 million tonnes, up from the 2025 crop of 9.5 million tonnes. The higher corn acres come at the expense of lower canola and spring wheat acres. Farmers are clearly responding to market signals.

Bids from ethanol processors are reaching three-year highs. Buying interest from feedlots and elevators sourcing for the export market have not increased to the same extent. To reiterate from our previous issue, Ontario corn ending stocks are expected to drop to historical lows at the end of the 2025-26 crop year. The market is functioning to ration demand by trading at a premium to the world market.

Canadian crop year-to-date corn exports for the week ending March 1 were 398,100 tonnes, down from last year’s number of 1.2 million tonnes. Northern European feed grain markets continue to be saturated with domestic wheat supplies.

Despite the rally in the corn futures market, export offers have only risen by US$2-4 per tonne. U.S. corn FOB the Gulf was quoted at US$225 per tonne while Brazilian corn was valued at US$226 per tonne FOB Paranagua.

The seeding of Brazil’s safrinha corn crop is moving into the final stages. Total Brazilian corn production is expected to finish in the range of 130 million-132 million tonnes, down from the 2025 output of 136 million tonnes. Conditions are favourable in Brazil, but we’re still expecting drier conditions to develop due to ‘La Nina’. Argentine farmers have started harvesting their record corn crop, which is expected to reach 53 million tonnes, up from last year’s output of 50 million tonnes.

U.S. farmers are expected to seed 94 million acres of corn this spring, down from 98.8 million last year. Missouri, Nebraska, Illinois and Indiana are experiencing drier conditions heading into the spring seeding period. This is favourable for seeding, but timely rains will be needed or the corn market is moving significantly higher. The world cannot afford a problem with the U.S. corn crop.

This week, we’re advising farmers to increase sales by 10 per cent bringing total sales to 80 per cent for the 2025 production.

Wheat

Ontario farmers planted 1.12 million acres of winter wheat last fall, down 64,000 acres from the fall of 2024. We continue to project an Ontario winter wheat crop of 2.5 million tonnes, compared to last year’s output of 2.9 million tonnes.

Ontario farmers are only expected to plant 43,000 acres of spring wheat versus 62,800 acres last year. This is a modern-day historical low.

U.S. hard red winter wheat was offered at US$281 per tonne FOB the Gulf on Friday, while U.S. soft red winter was quoted at US$263 per tonne. French soft wheat was offered at US$245 per tonne FOB Rouen. Russian 12.5 per cent protein was quoted at US$250 per tonne FOB the Black Sea. Ontario soft red winter was quoted at US$265 per tonne FOB St Lawrence port.

Conditions in Russia have improved over the past month, and the crop will come out of dormancy in fair condition. We’re factoring in a minor year-over-year decrease in Russian and Ukrainian wheat production. The ongoing war will be a significant factor determining export potential.

In Europe, the winter wheat crop in the northern regions has come out of dormancy earlier than normal due to warmer temperatures. Conditions are drier in parts of Germany, Poland, Hungary and Czechia. European wheat production will be down from last year, but it’s hard to put a number on the crop size at this time.

The winter wheat crop in the U.S. southern Plains needs rain. There are major concerns in Oklahoma, Texas and southern regions of Kansas. If the seasonal April rains do not materialize, there is a serious problem with the hard red winter wheat.

This week, we’re advising farmers to sell 20 per cent bringing total wheat sales to 80-90 per cent. We need to be selling into this recent strength. The U.S. winter wheat crop will be down from last year, but once harvest begins the market will come under pressure.

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Why it matters: The escalating conflict in Iran and surrounding Mideast countries is causing large price swings in energy, currency and equity markets, with that activity spilling into the fertilizer and agricultural markets.

Crude oil futures in London and New York soared almost 30 per cent in early trading to nearly $120 a barrel, one ofthe biggest one-day jumps on record, threatening to raise costs of products from gasoline to jet fuel. The prices then pulled back, with U.S. crude up 7.72 per cent at $97.92 a barrel and Brent at $100.56 per barrel, up 8.49 per cent on the day.

Investor jitters over soaring energy prices meant a wave of global stock and bond market selling which hung over the Wall Street open. In early trading, the Dow Jones Industrial Average 1.4 per cent, the S&P 500 dropped 1.26 per cent, and the Nasdaq Composite slid 1.16 per cent.

Iran named Mojtaba Khamenei to succeed his father Ali Khamenei as Supreme Leader, signalling that hardliners remained firmly in charge a week into the war with the U.S. and Israel.

That was unlikely to be welcomed by U.S. President Donald Trump, who had declared the son “unacceptable.”

With hostilities continuing in the Middle East and tankers unable to cross the Strait of Hormuz amid the threat of Iranian drone attacks, investors were bracing for a long stretch of higher energy costs.

Investors awaited Washington’s response, said Helima Croft, head of global commodity strategy at RBC Capital Markets. “With no clear definition of what winning looks like, it is hard to forecast whether this will be a multi-week or multi-month conflict.”

GLOBAL MARKETS SINK

European shares tumbled to their lowest in more than two months on Monday, with the pan-European STOXX 600 down 1.76 per cent in a third session of losses. The benchmark index shed 5.5 per cent last week, its worst weekly performance in nearly a year.

The oil price spike was sobering for major oil importers in Asian markets, with Japan’s Nikkei .N225 closing down 5.2 per cent after a 5.5 per cent drop.

China, another big oil importer albeit with a huge stockpile of crude, saw its blue-chip index fall roughly one per cent. China on Monday said inflation had already picked up in February before the current oil surge, with consumer prices rising 1.3 per cent on the year, not necessarily a negative development, given the country has long struggled with disinflation.

Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, wrote in a note on Monday that the U.S. equity market may still seem placid but there are “extreme” rotations and stock dispersions beneath the surface.

“Over the past 80 years, war-induced oil shocks have not been kind to equities, as nearly every episode has catalyzed a recession and market sell-off,” Shalett wrote.

CENTRAL BANKS FACE INFLATION CONUNDRUM

In bond markets, the risk of rising inflation outweighed safe-haven considerations to shove yields higher globally. Yields on 10-year Treasury notes rose 2.6 basis points to 4.158 per cent, up from a trough of 3.926 per cent just a week ago.

Interest rate futures slipped as investors feared the risk of higher inflation would make it harder for the Federal Reserve to ease policy, though disappointing U.S. jobs numbers seemed to argue for stimulus.

Data on U.S. consumer prices due on Wednesday is forecast to show the annual rate holding at 2.4 per cent in February.

The Fed’s preferred measure of core inflation due on Friday is forecast to hold at 3.0 per cent, well above the central bank’s two per cent target, and analysts see a risk of an even higher number.

The danger of energy-driven inflation has led markets to wager the next move in rates from the European Central Bank could be up, possibly as early as June.

For the Bank of England, markets have shifted to pricing just a 40 per cent chance of one more easing, compared with two cuts or more before the Middle East conflict started.

Nervous investors sought the liquidity of dollars while shunning currencies from countries that are net energy importers, including Japan and much of Europe.

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“Nvidia is bigger than all of Canada’s economy. It’s bigger than the Chinese stock market by itself,” stated Anderson. “That report, even though it’s not related to canola will have an impact. It’s the most powerful stock in the world.”

Based in Santa Clara, Cal., Nvidia controls about 80 per cent of the world market’s share of high-end graphics processing units and is well involved in developing artificial intelligence.

Should Nvidia’s report be favourable to the world markets, including canola, he pegged resistance for the May contract at C$620 per tonne on the Intercontinental Exchange. If momentum builds for the Canadian oilseed, Anderson put the next level of resistance at C$650/tonne, followed by C$680.

If Nvidia’s report is negative, Anderson said “the equity world stumbles, and it will feed itself” with crude oil, corn and other commodities falling back.

“Canola will get caught in the crossfire. It can go up to $620 or it can go down to $550,” he said.

Anderson added that canola, along with corn and soybeans on the Chicago Board of Trade, are oversold and looking for an increase.

“We won’t see $700 in the near future, but I hope we won’t see $550,” he commented.

Nvidia was scheduled to release its report after the North American markets closed on Feb. 21. The effects were to be felt the following day.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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“If you don’t think the economy is going to be in a substantial slowdown or recession, the prices are undervalued. If you do think we are going into a global slowdown, the prices have probably more room to fall,” Flynn explained.

“I lean more towards the fact that the market is overdone. We’re going to bottom out shortly,” he added, noting that he expects world supplies to tighten in 2024.

Until then, Flynn said the oil market was suffering from “high anxiety” due to the amount of volatility. One case in point was Saudi Arabia cutting its price for oil on Jan. 8, which saw values for Brent and West Texas Intermediate crude oils get hit hard.

In the same breath, he pointed to the risk to supplies that’s added some cost to oil. Namely the attacks on commercial shipping in the Red Sea being carried out by Iran-supported Houthi rebels in Yemen.

“But the reality is we haven’t seen any major oil disruptions. We haven’t lost too many barrels of oil because of this. Admittedly, [shipments] have been delayed around the Red Sea has added to the cost.

Flynn said there were widespread expectations the price of oil would have jumped with the start of the Gaza war and fears the conflict would spread throughout the Middle East. But such has not occurred so far.

He also pointed to the annual “rebalancing of the commodity index funds” with Bloomberg commodity index and the S&P Goldman Sachs index.

“When they rebalanced those indexes, they had to sell some oil. That put further downward pressure on prices,” Flynn said.

He said the hedge funds built a near-record short position in crude oil, which weighed on values.

“They’re betting on a recession. They keep selling in every rally in oil. They are doom and gloom, and they keep pushing the market lower,” Flynn commented.

“On the flip side of that, if they’re wrong, you can see a major reversal in price,” he added, noting colder temperatures will push up the demand for diesel and natural gas.

— Glen Hallick reports for MarketsFarm from Winnipeg. 

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“On Oct. 16, we were trading [January] canola at C$731 per tonne. On Nov. 2 we went down to C$672/tonne, a C$60 drop. Today, we traded at C$725, a C$50 increase,” said Palmer.

“All this is the mighty funds. The funds are carrying a record short position. They got spooked in the middle of October, took half of their position back, and then proceeded to put on a new short position towards the beginning of November,” he explained.

The United States Commodity Futures Trading Commission reported that as of Nov. 7 the net managed money short position in ICE canola futures was 102,884 contracts, based on 4,876 long and 107,760 short.

Palmer said those spec funds were keeping a close eye on the weather in Brazil, which is at either end of the spectrum. While the north remained far too dry to plant, the south was much too wet to get onto the fields. He said the long-range forecast has called for rain in the country’s north, something much needed for its soybean output to hit a record 163 million tonnes in 2023/24, according to the United States Department of Agriculture.

“If they do not do their part, then all of a sudden, the whole world starts coming to the U.S. and Canada for soybeans,” Palmer commented.

In the meantime, he said Canadian canola growers were cash rich with their bins full of the oilseed. With that he laid out two scenarios.

“If [northern] Brazil gets their needed rain, there’s just no export buying that could adequately take care of our canola supply and the soybean supply in the U.S.,” Palmer stated.

“The funds are going to sell everything in sight and take this thing lower. And the biggest thing is, the farmer is long. He hasn’t sold much and eventually is going to have to either dump it on the downside and make new lows, or he’s going to make more money filtering it out as we hit targeted prices.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Errol Anderson of ProMarket Communications has been impressed with canola’s recent rise. The January contract on ICE Futures was as low at $672 per tonne on Nov. 2 before rising to a week-long high of $709.50 five days later and eventually closing at $699.30 on Wednesday.

“We’ve gained about $30 per tonne and this has really been stimulated by the recovery in soybeans,” Anderson said. “The beans have also broken a near-term downtrend. Canola has been largely pulled up.”

On Oct. 25, the January soybean contract was as low at US$12.975 per bushel before rising to US$13.845/bu. two weeks later. Extreme weather in Brazil has cooled off expectations for the country’s soybean crop and China has recently purchased cargoes from the U.S. Both of these events have caused soybean prices to rise, according to Anderson.

“But the U.S. dollar is starting to go back up again. Right now, U.S. soybeans appear to be fairly competitively priced. But I think there’s a possibility the U.S. dollar will be quite firm,” he said.

The support for canola has been timely considering crude oil prices have dropped to approximately US$75 per barrel for West Texas International and US$80 for Brent due to economic concerns.

“The demand side on crude oil is extremely weak right now,” Anderson said.

He added that the good times for canola may be coming to an end.

“With the washout in crude and the canola market going up, that is very positive,” said Anderson, although he added that these rallies may not hold.

Given recent losses in energy markets and a general deflationary outlook on commodities, Anderson recommended farmers take the opportunity to look at their cash sales as “soybeans will have a bad day and it will pull the canola market down.”

On the other hand, if canola becomes the beneficiary of fresh news, according to Anderson, prices could move up to $730/tonne.

“If we break through, there could be another $20/tonne, but the odds of that right now are a little bit low to sell those rallies,” he said.

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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The gains came as farmers are in the middle of harvesting their crops, a time when the influx of fresh supplies normally pressures prices.

A severe drought that is disrupting grain shipments and slowing soybean plantings in rival exporter Brazil helped to propel markets higher, analysts said. Gains in crude oil and weakness in the U.S. dollar also set a positive tone for grain futures, they said.

Still, forecasts for hefty U.S. corn supplies may limit further gains. When farmers have finished the harvests and all the grain has been delivered, the corn left in storage should exceed the amount that has sat in U.S. silos for seven years, according to the U.S. government.

“In the face of a two billion-bushel-plus carryout, that’s what makes me wonder how far we can really go,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.

Most-active corn futures at the Chicago Board of Trade rose 13 cents to settle at $5.05 a bushel and touched their highest price since Aug. 21 at $5.05-1/2 a bushel (all figures US$).

Technical selling supported gains, traders said.

“Once you went above $5, it triggered a fair number of stops,” Pfitzenmaier said.

CBOT wheat ended up 13-3/4 cents at $5.94 a bushel and hit a three-week high at $5.94-1/2.

CBOT soybeans ended up 4-1/2 cents at $13.15-1/2 a bushel after hitting its highest price since Sept. 21 at $13.17-3/4. A rally to July highs in soymeal futures helped support soybeans, traders said.

“Meal’s been on a tear here,” said Matt Wiegand, commodity broker for FuturesOne.

Weekly U.S. soybean, corn and wheat export sales for 2023-24 were within analysts’ estimates. Difficult logistics in Brazil could create a short-term window of opportunity for improved U.S. corn exports, a broker said.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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Crude oil rallied more than five per cent on Friday on the escalating Middle East conflict as the Israeli military called for civilians to leave Gaza City ahead of an anticipated ground invasion.

Hot U.S. consumer prices data, meanwhile, reinforced expectations that interest rates may remain higher for longer to tame inflation.

Rising costs for consumer goods often impacts demand for costlier beef cuts as buyers trade down for cheaper proteins.

“We had some position squaring and profit taking heading into the weekend,” said Matt Wiegand, commodity broker for FuturesOne.

“With the big run-up in energy prices today, even though the stock market was mixed, that kind of outside market movement tends to default into livestock selling,” he said.

Poor packer margins and lacklustre wholesale beef movement further weighed on the market, he added.

CME December live cattle futures settled down 1.05 cents at 186.75 cents/lb. (all figures US$). The contract hit overhead technical resistance at its 20-day moving average, but found support at its 50-day moving average.

November feeder cattle futures settled down two cents at 251.575 cents/lb., while January feeders finished 2.225 cents lower at 252.25 cents.

Lean hog futures were also mostly lower on the day, with the benchmark December contract down 0.6 cent at 69.5 cents/lb.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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Canola “has found a level where it’s stabilized, but there’s not a lot of life right now,” said Ken Ball of PI Financial in Winnipeg, adding that “all canola needs is a little spark, and it’s just not getting it right now.”

With seasonal harvest pressure slowing down and crush margins historically wide, Ball expected canola futures could be due for a move higher.

However, he added, speculators were still leaning on the short side of the market and showing a reluctance to buy.

“It will need some help from (soy)bean oil,” said Ball on what could trigger a sustained rally in canola.

However, while he expected that market should be stabilizing, recent losses in crude oil and diesel were bearish.

From a chart standpoint, the November canola contract has found support at around $710 per tonne, with $725 acting as nearby resistance.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.

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However, both commodities have found nearby support on the other side keeping values rangebound overall.

The U.S. soybean harvest was 12 per cent complete as of Sunday, up one point from the five-year average, with corn running two points ahead of average at 15 per cent done, according to the latest U.S. Department of Agriculture data.

After briefly trading below the $13 per bushel level for a few days, the November soybean contract has corrected back above that psychological level, which should provide nearby support (all figures US$).

Meanwhile, December corn touched a session low of $4.6775 on Sept. 19 but has since moved nearly 20 cents off that level.

A rally in crude oil was cited as a major supportive influence in both commodities on Wednesday, with oil at its highest level of the past year. Continued strength in energy markets should underpin the agricultural futures, with harvest conditions also being followed closely.

Forecasts calling for more rains in parts of the U.S. Midwest over the next week supported the futures on Wednesday, given the possibility of harvest delays in some fields. However, the moisture may still be beneficial to any crops still developing.

USDA on Friday will release quarterly stocks data as of the beginning of September, with average trade guesses calling for a downward revision to U.S. soybean ending stocks from the government agency’s most recent forecast and a small increase in the corn carryout. Any surprises in the data could provide some direction in the futures.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.

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