North American grain and oilseed markets saw wide price swings during the week ended Nov. 17. A barrage of conflicting news regarding the long-running conflict in Ukraine was at the forefront.
The week started amid talk that Russia was considering backing away from the agreement allowing Ukrainian grain shipments through the Black Sea. Any disruption to that flow would tighten world supplies of numerous commodities, which would in turn support prices.
While the “will they/won’t they” grain corridor talk has been going on for a while, news out of the region took a drastic turn Nov. 15 on reports a Russian missile had strayed out of Ukraine and into neighbouring Poland, killing two people.
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Poland is a NATO member and an attack on that country would escalate the conflict considerably. By Nov. 16 cooler heads were again prevailing. The missile strike was deemed unintentional and possibly tied to Ukrainian anti-missile defence measures.
Grain prices took a tumble as a result, with losses outpacing any gains from the day before.
By Nov. 17, the United Nations reported that an agreement had been reached to keep Ukrainian grain and other shipments moving through the Black Sea for another 120 days. Energy and grain markets fell, with some chart stops likely hit on the way down.
Whether the agreement holds remains to be seen, but the headlines were enough for futures traders and could easily cause more volatility in the weeks ahead.
This is the time of year when grains and oilseeds typically trade in a sideways pattern because the North American harvest is complete, South America’s next crops are getting started and many participants move to the sidelines through the holiday season.
With little fresh news from a fundamental standpoint, those bigger-picture global political developments may hold more sway than usual.
The ICE Futures canola market traded near its highest levels of the past month during the week, before eventually falling to its weakest levels since late September.
Of note in canola, while the nearby January contract and the more deferred months were all lower on the week, the front month lagged to the downside and built up a sizeable premium over the deferred contracts. That relative strength was seen as a sign of good nearby demand coupled with a slowdown in farmer selling.
Weekly exports reported by the Canadian Grain Commission for the week ended Nov. 13 of 294,900 tonnes were up sharply from the 201,600 tonnes moved the previous week. Domestic usage was also up on the week, but farmer deliveries fell by about 100,000 tonnes, coming in at 356,500 tonnes. That marked the smallest deliveries into the commercial pipeline since the beginning of September.
