Canola contracts on ICE Futures were due for a pullback during the week ended Nov. 26, after gaining about $50 throughout the month.
Canola prices started the week at $584.10 per tonne, with the January contract gaining over $7 per tonne. After making significant gains during November, market participants expected canola to pull back and consolidate. With a lack of buying support due to closed U.S. markets, canola did falter mid-week, closing at $577.40 on Thursday.
Soybean futures have been fuelled by concerns of dry weather in key growing regions of South America, along with strong export demand. However, some scattered showers are expected this week in both Brazil and Argentina, which took a bit of shine off of Chicago soybeans.
Losses in other global vegetable oils weighed on canola prices, with Malaysian palm oil and European rapeseed showing weakness in overnight activity. There are reports that India is cutting import duties on crude palm oil to 27.5 per cent due to concerns of high domestic prices. The cut, which comes into effect on Nov. 27, may increase demand for imported palm oil, which will give values a boost.
Market participants were also positioning ahead of Statistics Canada’s report on principal field crops, which will be released Dec. 3 and will feature this year’s yields and production numbers.
Canola prices held up relatively well to losses in the Chicago soybean market. After a flurry of foreign buying stoked mainly by China, there are reports that some orders scheduled for early 2021 have been cancelled due to lower crush margins. China imported 124.9 million bushels of U.S. soybeans in October, which is nearly three times higher than its imports at the same time a year ago. Rising hog herds and poultry flocks in China contributed to the country’s rising soybean demand.
The Canadian dollar gained strength throughout the week, capping further gains for canola. The loonie was around 77 U.S. cents for most of the week, which is near year- long highs. The Canadian currency was stronger due to a dip in the U.S. dollar index, which was around 92 points. Strength in crude oil values was supportive of the loonie, as the Organization of Petroleum Exporting Countries and its allies (OPEC+) are expected to co-ordinate output cuts into the new year, in order to balance off lowered demand due to the COVID-19 pandemic.