ICE Futures Canada canola futures touched some of their best levels since July during the week ended November 3, but ran into resistance at the highs and were right back where they started by Friday’s close.
The January contract hit a session high of $522.50 per tonne on November 2, but was back below the psychological $520 mark by Friday when it closed at $516.80. Looking at a weekly chart, the $520 to $530 area marks a fairly noticeable resistance zone, with any moves above that range few and short lived over the past four years.
The strength in canola was largely tied to the weakness in the Canadian dollar, as it traded below 78 U.S. cents. The declining currency makes canola that much more attractive to international buyers pricing in U.S. dollars.
Export demand remains solid for canola, with the latest weekly Canadian Grain Commission (CGC) report showing exports during the crop year to date at about 2.4 million tonnes. That’s up by roughly 300,000 tonnes from the same point the previous year.
The domestic crush remains solid as well, with the total crush to date of 2.26 million tonnes only 40,000 behind what was processed during the first three months of the previous crop year, according to the latest Canadian Oilseed Processors Association (COPA) data.
Harvest operations are wrapped up across most of the Prairies, and farmers may be closing their bins for the time being waiting for their next target. Cash bids in the $11-per-bushel area could be found across most of the Prairies during the week, but the $12 mark is likely the next selling target for many growers.
In the U.S., the soybean harvest was in its final stages while the corn harvest passed the halfway market. Soybeans and corn both chopped around during the week, with traders waiting on a clearer sense on the size of the crops before pushing values too far one way or the other.
The USDA’s monthly supply/demand report, due out on November 9, could provide some answers. Anecdotal reports that later harvested soybean crops were seeing disappointing yields has many traders anticipating a downward revision to the overall U.S. soybean yield estimate in the November USDA report. Corn, meanwhile, is expected to see yields revised higher from the October report.
Beyond the U.S. production, the world’s next crop is just being planted in South America, making weather conditions there important to keep an eye on.
For wheat, the Chicago and Kansas City contracts hit their softest levels in six months during the week, but may have finally hit a bottom as buying came forward at the lows. U.S. wheat is thought to finally be at a price that’s competitive on the world market, bringing in some bargain buying.
Minneapolis spring wheat never fell as low as its more actively traded winter wheat counterparts, and also outpaced to the upside when those markets moved higher. World supplies of higher-protein wheat are reportedly on the tight side, which could lead to widening price spreads going forward.