ICE Futures canola contracts held within a narrow range during the week ended Feb. 8, but trended higher overall, with a weaker tone in the Canadian dollar providing some support.
The currency lost roughly a full cent relative to its U.S. counterpart over the course of the week, settling at 75.36 U.S. cents on Feb. 8.
Meanwhile, soyoil futures at the Chicago Board of Trade rallied to their best levels in eight months, and the combination of the falling currency and the rising vegetable oil market helped canola crush margins hit their best levels of the past year.
The crush ended the week at $79 per tonne above the nearby March contract, which marked a $20-per-tonne improvement over the past month.
The solid crush margins should help keep domestic processors running at a steady pace, with the crush during the crop year to date of 4.8 million tonnes, about 200,000 tonnes ahead of the 2017-18 pace.
However, exports continue to lag the year-ago level, with 5.2 million tonnes of canola exported as of Feb. 3, about 400,000 tonnes behind what moved during the same time frame the previous year.
Uncertainty over trade relations with China had traders worried over a possible slowdown in Chinese exports, which would cause those exports to fall even further off the pace.
Statistics Canada released stocks data on Feb. 5, showing 14.5 million tonnes of canola in the country as of Dec. 31, 2018. That was nearly a million tonnes above the supplies on hand at the same point the previous year, and marked a new record for Dec. 31 stocks.
While burdensome, the large stocks were anticipated by traders and did little to move the market.
Much of the week in the grain markets was spent biding time ahead of a slew of reports from the U.S. Department of Agriculture released on Feb. 8. In addition to monthly supply/demand numbers, the agency also released a few other reports that had been delayed by the 35-day partial government shutdown. Expectations were high, but the reports came and went with only a muted reaction from the futures.
For soybeans, USDA lowered its U.S. ending stocks forecast to 910 million bushels, from an earlier prediction of 955 million. That would still place ending stocks at roughly double the 2018 level.
A downward revision to Brazil’s soybean crop was also included in the data, but hot and dry conditions in the South American country likely mean that actual production could be revised lower still.
The uncertain trade situation between the U.S. and China remains the major factor in the grain and oilseed markets, with any talks between the two countries followed closely. While they reportedly remain far apart on a number of issues, the fact they are talking is generally being taken as an optimistic sign by grain traders.