ICE Futures Canada canola contracts posted solid gains over the week ended April 20, correcting off of nearby lows despite a softer tone in Chicago soybeans and soyoil.
Weakness in the Canadian dollar, which lost about a cent relative to its U.S. counterpart, accounted for some of the strength in the futures. However, crush margins still deteriorated, making canola look expensive compared to other oilseeds.
Strength was also partially tied to talk of increased export interest, as the ongoing trade dispute between China and the U.S. reportedly has some Chinese interest shifting away from soybeans.
That talk hasn’t yet shown itself in actual physical movement, with Canadian canola exports still running about half a million tonnes behind the year-ago pace. While the latest weekly canola exports of 243,000 tonnes were the best in over a month, a strike at Canadian Pacific Railway could put a damper on any more export activity as already-slow movement from the Prairies to the West Coast faces another hurdle.
The strike by CP conductors, engineers and signal maintainers was averted over the weekend, but a disruption is still possible as the two sides have yet to reach an agreement.
As winter finally gives way to spring, the weather was also at the forefront of agricultural markets during the week. Another blast of snow in Alberta and Saskatchewan kept fears of a late start to spring seeding alive. However, forecasts are turning warmer and planting will be underway where conditions allow within the next few weeks.
Statistics Canada releases its first survey-based acreage estimates on April 27. Most industry participants expect to see another record-large canola crop in the country, possibly a million acres above the 23 million seeded last year.
Weather kept U.S. markets on edge during the week as well, with snow leading to seeding delays in the Midwest, while the chance of rain in the southern Plains weighed on wheat.
China imposed a hefty 179 per cent tariff on U.S. sorghum in its escalating tit-for-tat trade war. While sorghum is a minor crop in the grand scheme of things, it still accounts for about six million acres in the U.S. — with China the main buyer. Boats carrying the grain en route to China have reportedly been rerouted, and the hit to prices will likely have some producers questioning their rotations. Soybeans and corn are the two likely contenders to take some acres, although more tariffs against those crops are still a possibility as well.
For wheat, dryness in the southern U.S. Plains was alleviated somewhat by weekend rains, but more moisture will be needed. Meanwhile, spring wheat seeding operations were running behind normal in northern U.S. growing regions, due to the cool and wet spring. Forecasts are finally changing, and the Minneapolis spring wheat premiums are expected to erode.