North American grain and oilseed futures were looking for direction in mid-February, with little news to pull values too far one way or the other.
ICE Futures canola contracts drifted lower before recovering most of those losses, remaining rangebound overall. Soyoil futures in Chicago find themselves in a downtrend, but meal remains pointed higher and soybeans choppy. There’s a general sense of anticipation in markets, as traders wait for some fresh catalyst to break prices out of their rut.
Any news out of South America is being followed closely and could provide that nudge.
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Spillover from a rising CBOT soy complex has helped push ICE canola futures higher, offering a reprieve — for now, at least — from seasonal harvest pressure and the absence of demand from China.
Brazilian farmers are busy harvesting soybeans and seeding the second corn crop that typically follows. However, heavy rains in some key growing areas have caused delays, while political unrest in the country could also cause disruptions to movement.
Meanwhile, Argentina may have received some much-needed moisture, but the country remains too hot and dry overall. Soybean and corn production estimates out of Argentina have seen a steady downward progression, raising concerns over how much soymeal and soyoil the country will be able to export this year.
The consensus for now is that Brazil will harvest a record soybean crop, despite any nearby delays, with big supplies there more than making up for any losses in Argentina. Some Brazilian beans are already reportedly making their way to Argentinian crushers to fill the gap. In addition, rains in Brazil should be good for yields of the next corn crop, although the planted area remains in question.
Beyond South America, the larger unknown in the grains and oilseeds remains the situation in Ukraine as the conflict there enters its second year. Wheat is most affected, as both Russia and Ukraine are major wheat growers, but all markets are seeing spillover uncertainty.
The agreement allowing Ukrainian grain movement through the Black Sea is set to expire later in March. If that were to occur it would give North American wheat a boost, but an extension of the agreement is more likely at this time.
Ukraine’s own grain production has been seriously hurt by the conflict, but Russia reportedly has a large amount of exportable wheat and is unlikely to want to cause any disruptions to its movement.
Activity in crude oil and larger world financial markets, as global economies continue to try and curb inflation, will also influence agricultural futures in the weeks ahead. The Canadian dollar came into a bit of pressure during the week ended Feb. 17, falling by roughly a cent relative to its U.S. counterpart. Any weakness in the loonie is typically supportive for Canadian exports, but the larger bearish influence of a strong U.S. dollar on world trade should also not be underestimated.
