ICE Futures Canada canola futures moved $11 to $13 per tonne higher during the short week ended April 2, with markets closed for Good Friday on April 3.
The advances seen in canola were mainly linked to a rally in the Chicago soybean market after the U.S. Department of Agriculture’s first survey-based acreage estimate of the year came in smaller than expected.
USDA said growers in the U.S. intend to plant 84.64 million acres of soybeans this spring — about a million fewer acres than anticipated.
Those extra acres are likely to move into corn, as USDA pegged corn area at a larger-than-expected 89.2 million acres.
The corn market initially moved sharply lower after the report was released on March 31, but managed to erase some of the weakness in the days following. Overall, the market was still about three to five U.S. cents per bushel lower to end the week, but the focus was starting to shift to actual planting conditions in the U.S. for both corn and soybeans.
Some traders believe USDA’s estimates will change, as the price ratio still favours soybeans. They expect corn acreage to be smaller than USDA predicted, and soybean area to be larger. Planting delays in the U.S. Delta could also lead to some intended corn area shifting into soybeans.
Canola picture fuzzy
The canola market is also starting to focus on spring seeding conditions, with major planting likely a few weeks away in both Canada and the U.S.
The picture for Canada’s canola crop is murky, with a very wide range of acreage estimates still floating around. The first survey-based acreage report from Statistics Canada isn’t due out until April 23.
Until crop establishment conditions become more concrete, North American grain and oilseed markets are likely to stay in a choppy “spring” pattern. There will be some spurts of buying and selling seen sporadically until a longer-term trend can be established based on weather — but for the most part, funds and farmers are expected to stick on the sidelines.
If the crops do get off to a good start, it may not be reflected in prices until later in the growing season, as traders like to keep weather premiums built into the market just in case there’s a weather scare.
Seeding conditions will also be important for U.S. wheat futures, as spring wheat will be seeded in both Canada and the U.S. soon — but weather affecting winter wheat crops will also move the market.
Concerns about dry conditions lowering production prospects for U.S. winter wheat in the Great Plains bolstered prices during the week, with Minneapolis, Kansas City and Chicago futures all up over 20 cents U.S. per bushel.
The large advance comes despite a huge drop seen on March 31, following USDA’s stocks and planting report, which was thought to be more neutral for wheat, but bearish for corn.
USDA pegged 2015-16 all-wheat acreage at 55.4 million, slightly below expectations.