ICE Futures Canada canola contracts kept within their well-established sideways trading range during the week ended Feb. 2, as the market remains stuck in its own version of the Groundhog Day movie.
The nearby March contract has held within a $10 range ($490-$500 per tonne) for more than a month now, looking for a reason to move one way or the other.
What it will take to break out of the loop remains to be seen, but South American weather conditions are one factor to watch. Parts of Brazil are just getting started with harvest, which means rains there could cause delays, which would support prices. Meanwhile, hot and dry conditions in Argentina have cut into the yield prospects there, but updated forecasts were calling for some much-needed precipitation late in the week.
Statistics Canada on Feb. 5 released its stocks as of Dec. 31 report, which is probably one of the least followed of agricultural data put out by the government agency, but it still has the potential to sway the markets if anything is deemed surprising. The amount of grain in commercial hands is well known, but supplies on farm typically come with more of a question mark.
Total canola stocks were pegged at 14.15 million tonnes by the government agency, about 800,000 tonnes above the level seen at the same point a year ago and a new record for the end of December. While canola supplies are large, the immediate reaction was muted in the futures and prices were on the rise Monday morning.
In the U.S., wheat saw some excitement during the week, climbing higher at one point on the back of some very poor condition ratings in Kansas and other winter wheat-growing states. However, prices turned the other way in the latter half of the week as profit-taking came forward. Kansas City contracts held on to gains of about 20 U.S. cents per bushel, but the Minneapolis spring wheat lost a few cents overall.
Snowfall covered the Midwest over the weekend (Feb. 3-4), but the driest parts of the southern Plains missed out, which should keep weather at the forefront.
For soybeans and corn, in addition to South American weather, traders are also keeping an eye on export movement. U.S. corn remains favourably priced on the global market and continued to move at a good pace. However, weekly soybean sales were disappointing, which kept that market under some pressure.