The ICE Futures canola market continued to chop around unchanged during the week ended Sept. 21, buffeted by a conflicting mix of trade wars, weather issues, spillover losses in soybeans and harvest pressure.
The $50-per-tonne level seems like a distant memory these days, as canola was content to hang above the $485 mark in the November contract.
Harvest is slowly making progress across Western Canada, with most farmers waiting for drier weather to get machinery back on the field. The delays have lent support to prices although there are expectations the market could see a bump when the crop is in the bin. Farmer selling has been steady, albeit on the slow side, as crush margins dwell near historic lows.
The market was still grappling with the aftermath of the U.S. Department of Agriculture’s production report, which pegged the U.S. soybean crop at a higher-than-expected 4.7 billion bushels. The agency also raised the ending stocks number in the U.S. by 60 million bushels, to 845 million.
That report seemed to have a more noticeable effect on canola than the latest Statistics Canada production report. The agency on Sept. 19 released a report which was compiled using satellite data. This model-based estimate has only been around for a few years but has drawn some curiosity from participants. It pegged canola production at 21 million tonnes, up significantly from StatsCan’s previous estimate of 19.2 million, compiled from farm surveys. Despite the higher number, the market largely shrugged off the hike, suggesting not everyone is sold on the new method yet.
On the international front, smaller-than-expected rapeseed crops in Europe and a cold snap in Australia have also helped underpin canola prices.
U.S. soyoil and Malaysian palm oil futures continue to trade near contract and multi-year lows.
In the U.S., soybean futures gained ground during the week, propped up by speculative buying and harvest delays. Much of the U.S. Midwest was doused by showers over the week, keeping combines off several key areas. Rumours took hold last week that Argentina has been buying beans from the U.S. and then selling them to China, or crushing them first and then selling the meal. The front-month November contract rose roughly 17 U.S. cents, to US$8.4725 per bushel, by Friday’s close.
Corn futures chalked up gains during the week due to fund buying. Rains in the U.S. Corn Belt also delayed the harvest, which was supportive. Meanwhile, Hurricane Florence devastated corn crops in the Carolinas. The front-month December contract rose over $6 during the week, to US$3.5725.
Chicago wheat futures jumped roughly US$10 during the week, with the dominant December contract closing Friday at US$5.2175. The spring wheat harvest in the U.S. has essentially wrapped up with winter seeding well underway. U.S. exporters continue to be undercut by cheap supplies of wheat flowing out of the Black Sea region. Cold temperatures in Australia may have caused some damage to the wheat crop, which was supportive.