Canola futures knocked at upper resistance repeatedly over the week ended Oct. 20, but held rangebound for the most part before finally breaking higher on Thursday and Friday.
Gains in Chicago soyoil provided the spark for the eventual move higher in the Canadian market, as veg oil markets reacted to news the U.S. Environmental Protection Agency would not be cutting biofuel mandates in the country. Recent proposals calling for reductions to renewable fuel targets had raised concerns in the agriculture sector, but the powerful Midwestern farm lobby efforts proved effective, and U.S. President Donald Trump instructed the EPA not to consider the proposals.
Canola also found added strength from a downturn in the Canadian dollar, as the currency fell sharply relative to its U.S. counterpart on Oct. 20, moving from about 80 U.S. cents to 79.3 U.S. cents.
Lingering harvest delays in northern Alberta also remained supportive for canola, with about 20 per cent of the province’s crop still in the field as of Oct. 17. Snow, rain and heavy winds were especially a problem in the north-west part of the province, where just under half of the canola crop has actually been harvested.
While a repeat of last year remains a possibility, industry participants are still generally optimistic that the crop will get off before the winter sets in for good.
Farmers continue to make steady deliveries into the commercial pipeline, with visible sup- plies rising to 1.45 million tonnes in the latest weekly Canadian Grain Commission report.
In the U.S., the harvest is in full swing and relatively favourable Midwestern weather kept the bias lower for both soybeans and corn during the week.
While the harvest should continue to draw some headlines, especially if there are any sig- nificant weather-related delays, much of the attention in the U.S. futures is already shifting to South America. Brazilian farmers are seeding their next crop, with a lack of moisture caus- ing delays in some areas. However, there is still plenty of time to get the crop in there, and any forecasts calling for rain should be bearish for Chicago futures. Argentina, meanwhile, is too wet in some cases.
U.S. wheat futures lacked any clear direction during the week, although large world crops kept prices under pressure for the most part. Russia is expected to be a bigger player on the world export front this year, which cuts into the potential for U.S. sales.
While Russia has more wheat to sell, the opposite holds true elsewhere and declining crop prospects out of Australia under- pinned the market. Tight supplies of higher-protein wheat worldwide also helped prop up Minneapolis futures relative to Chicago and Kansas City as well.
Minneapolis December wheat edged lower over the course of the week, settling at US$6.11 per bushel on Oct. 20. However, its premium relative to Chicago soft wheat widened by about 10 cents, to US$1.85.