ICE Futures Canada’s May canola futures posted light gains during the week ended March 29, generally hanging in a recently established range of $520-$525 per tonne.
Supportive chart signals helped keep canola aloft to start the week. It was somewhat bumpy for futures, though, as the spectre of a large carry-out and expectations for a large canola crop being seeded in the spring weighed on values.
Slight weakness in the Canadian dollar was supportive for canola even as farmer hedges dragged on values. Analysts and stakeholders in the industry also waited with trepidation for the U.S. Department of Agriculture’s planting intentions report on March 29. Many suspected the agency would raise the soybean acreage number in the U.S. and took safe positions ahead of its release. As a result, volumes were light in the buildup to the report as some traders waited on the sidelines.
When Thursday came, however, most of the trade was in for a jolt as USDA actually lowered its acreage estimate to 89 million acres. The trade estimate was closer to 90.1 million.
Soybean prices quickly began to rise after the report came out and canola took strength from that.
The report wasn’t all bullish news, though, as USDA’s projections for the spring carry-out were in line with most traders’ expectations. Ending stocks were pegged at 2.1 billion bushels.
Other factors supporting canola included a hike in export activity, slow farmer selling and the Malaysian government’s decision to impose a tax on exports of palm oil.
The soybean market looked set to suffer losses during the week until Thursday’s report pushed values higher. The May CBOT contract entered the day below the US$10.25-per-bushel mark but shot up to US$10.50 before finishing slightly lower.
There are ideas the lower-than-expected acreage figures for soybeans and corn could be due to financial pressure on farmers, meaning some acres could simply be left fallow.
Corn futures followed a similar path to soybeans, entering Thursday morning below the US$3.75-per-bushel mark before exploding above US$3.87. Corn acreage in the U.S. was estimated to be 2.2 million acres less than last year, which boosted prices. However, corn stocks were pegged at a massive 8.9 billion bushels, which tempered the gains somewhat.
Chicago wheat futures remained fairly steady through Thursday’s volatile stretch. The May contract hovered around the US$4.50-per-bushel mark. USDA pegged wheat acreage at 47.3 million tonnes, about what some analysts had expected. About 32.7 million of that is expected to be winter wheat.