ICE Futures Canada canola contracts were pressured by a bearish Statistics Canada report during the week ended Dec. 8, but managed to stay within their recently established technical range.
For the most part, the dominant January contract hovered somewhere between $505 and $510 per tonne.
Futures received some support from the Canadian dollar, which was at 79.11 U.S. cents on Tuesday, but dropped to 77.71 U.S. cents on Friday morning. That downward action made canola more attractive to domestic crushers and foreign buyers.
The biggest impact on canola was felt on Wednesday when Statistics Canada released its final production estimates for the year. The agency pegged canola production at 21.3 million tonnes for 2017-18. That amount exceeded analysts’ estimates and surpassed last year’s 19.6-million-tonne crop, which was a record at the time.
Up to now, the industry had been concerned that a shortfall in production would lead to serious shortages of canola in the system. The stockpiles may still be on the low side but it appears the levers and mechanisms available to the canola industry should be enough to keep adequate supplies on hand until the new crop is ready to be sold.
The report also proved the dry conditions felt in Alberta and western Saskatchewan this summer weren’t enough to damage yields as many had feared.
Canola typically tends to drift lower after the U.S. Thanksgiving holiday, so there is some reason to think it may start to look for loftier territory on the charts. However, vegetable oil, South American weather and the Canadian dollar will likely continue to be the main drivers of the commodity in the near future.
In the U.S., soybean futures dropped below major support at the US$10 level. The market had a brief run higher earlier in the week due to concerns over excess dryness in Argentina. Ideas that regulatory inspections in China will delay exports to the Asian country also supported the market. However, traders took profits near the end of the week and the market found itself well below technical support levels by Friday.
Corn futures continued to chop around the US$3.50 mark, with support coming from technical buying and South American weather news. Planting in Argentina is behind schedule and some cornfields may not get planted at all. Fund selling dragged on prices.
Wheat futures on the Chicago Board of Trade suffered losses over the week ended Dec. 8. The front-month January contract fell roughly 15 U.S. cents a bushel due to the growing glut of wheat on the world market. Wheat futures drew some support from heavy rains in Australia, which damaged some of that country’s crop. Wheat prices in Kansas City and Minneapolis were also dragged lower.