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North American Grain and Oilseed Review: A ‘turnaround Tuesday’ for canola

MarketsFarm, 03.12.20

WINNIPEG, Dec 1 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts finished higher on Tuesday, recouping most of yesterday’s losses in a show of independent strength.

Chicago soyoil, European rapeseed and Malaysian palm oil were lower today, which tempered further gains in canola.

A trader said there continues to be strong commercial and spec demand for canola, but he cautioned there will be technical resistance when prices are near recent record highs.

Positioning ahead of Thursday’s Statistics Canada principal field crops report was also a feature. Although the general consensus is for the federal agency to lower production from its September estimate of 19.3 million tonnes, there is enough uncertainty in the markets to have pushed canola prices up.

The Canadian dollar was higher, but wasn’t impeding the rise in canola prices. The loonie was at 77.30 U.S. cents, compared to Monday’s close of 77.12.

In the monthly export report from the Canadian Grain Commission, canola shipments to China are up by nearly 88 per cent in the 2020/21 marketing year. As of the end of October, China imported 716,400 tonnes of versus 381,800 tonnes a year ago.

There were 32,530 contracts traded on Tuesday, which compares with Monday when 35,542 contracts changed hands. Spreading accounted for 22,716 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Jan 583.80 up 5.70
Mar 579.10 up 5.40
May 574.10 up 5.00
Jul 569.00 up 4.70

SOYBEAN futures at the Chicago Board of Trade (CBOT) were lower on Tuesday, due to the South American weather forecast and technical selling.

The outlook for Brazil and Argentina is for a half-inch to two inches of rain today. It’s uncertain if the precipitation would be enough to relieve the stress soybean crops in both countries are under.

High prices were said to be deterring further purchases of United States soybeans by China.

The U.S. Department of Agriculture (USDA) reported the October soybean crush was 197 million bushels, which is 10 million bushels more than the October 2019 crush. The amount of crude oil produced was about 2.3 million pounds, a six per cent increase from this time last year. Production of refined oil was almost 1.6 million pounds, up one per cent from October 2019.

Despite the dry conditions in southern Brazil, International FCStone nudged up its estimate of the country’s overall soybean production to 133.9 million tonnes.

There’s another strike in Argentina affecting its exports. Oilseed workers and grain inspectors took to the picket lines, demanding higher wages.

CORN futures were lower on Tuesday, also due to the South American weather forecast and technical selling.

International FCStone boosted its forecast for Brazil corn production by 1.76 million tonnes, calling for 109.3 million tonnes.

The USDA reported 481 million bushels of corn were used in October for alcohol and other uses. That’s a one per cent increase over the corn used in October 2019. Corn for fuel alcohol was 433 million bushels, down one per cent from the previous October.

WHEAT futures were down on Tuesday, as winter wheat crop conditions rebounded from last week.

In the weekly crop progress report, the USDA reported that 92 per cent of the winter wheat crop has emerged as of Nov. 29, for a three-point improvement over the previous week. The five-year average is 91 per cent emerged.

The crop’s condition was rated at 46 per cent, recouping the three-point loss incurred the previous week.

This also marked the last weekly crop progress report for 2020. The USDA will issue its first report of 2021 on April 5.

SovEcon estimated the 2020 Russian wheat harvest at 79.2 million to 82.8 million tonnes. IKAR pegged the country’s wheat crop at 78.0 million tonnes.

In international purchases, Egypt acquired 170,000 tonnes of wheat from Russia and Ukraine, while Japan issued a tender for 127,000 tonnes, to come from the U.S., Canada and Australia.

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