ICE Futures Canada canola contracts moved higher over the course of the week ended Oct. 6, hitting their best levels of the past month as snow hit parts of the Prairies and put a halt to harvest operations.
With about a quarter of the canola crop still out in the fields Prairie-wide, the adverse weather in Alberta and parts of Saskatchewan had investors remembering the 2016 harvest that saw many fields not harvested until the spring. There is still plenty of time for the 2017 harvest to finish before history repeats itself, but the concerns were still enough to prop up the market.
Farmers in areas where the harvest was done, or at least nearing the end, continued to make steady deliveries into the commercial pipeline, according to weekly Canadian Grain Commission data. Offshore movement and domestic crush pace remain strong as well, however, and visible supplies declined for the first time in six weeks, hitting 1.29 million tonnes.
The trade is generally counting on a canola crop of 20 million tonnes, which would be up slightly from the current official estimate. While anecdotal yield reports are beating expectations in many cases, the final tally remains to be seen.
From a chart standpoint, November canola may be trending higher in the short term, but it remains stuck right in the middle of a longer-term sideways trading range between about $480 and $520 per tonne.
In addition, while the Canadian harvest may be in its final stages, the U.S. harvest is just getting started.
Cool and wet conditions in parts of the Midwest led to delays during the week, providing some underlying support for U.S. futures. However, the delays are not yet significant enough to raise serious concerns, and better weather in the forecasts should limit the upside as the harvest progresses.
The U.S. Department of Agriculture releases updated supply/demand estimates on Thursday, Oct. 12, and U.S. traders are generally banking on a slight increase in average yields for both corn and beans.
Attention is also shifting south in the markets, with Brazil just getting started seeding its next soybean crop. Dryness in the country had kept some caution in U.S. futures, but good rains in key soybean-growing regions over the past week should aid with germination.
Activity in U.S. wheat futures was mixed during the week, with gains in Minneapolis spring wheat and a softer tone in the Chicago and Kansas City winter wheat contracts.
Tight supplies of higher-protein wheat provided some support to the Minneapolis futures, but the overall picture in wheat remains bearish.
Rising Russian wheat production estimates should see that country as a larger competitor in the global export market this year. Europe’s wheat crop also beat earlier expectations, according to private estimates coming out of the region.