ICE Futures canola contracts held within a rather narrow range during the week ended July 27, with volumes on the light side as both farmers and end-users keep to the sidelines ahead of the harvest.
Dryness remains a concern in a number of areas, but those concerns have so far not been enough to give prices a boost. Provincial crop reports paint a picture of generally favourable yield prospects, with Saskatchewan’s canola crop rated 70 per cent good to excellent and Alberta’s was pegged at 66 per cent. The weekly Manitoba report didn’t place a number on the conditions, but noted that hot temperatures and variable rainfall had fields developing at a quick pace.
With the harvest just around the corner, end-users are banking on off-the-combine sales to keep them supplied and see little reason to bid up the market at this time. A rally in wheat could alter plans somewhat this year though, with spring wheat futures in Minneapolis rallying by 50 cents per bushel during the week. The strength in wheat could make it a more enticing option for generating cash this fall.
Wheat futures were up once again Monday morning, July 30, as a number of key wheat-growing regions of the world remain on the hot and dry side. Europe, the Black Sea region, and Australia are all in varying states of drought, with production prospects declining steadily.
The International Grains Council released updated production estimates during the week, lowering its forecast for world wheat production by 16 million tonnes from an earlier forecast. At 721 million tonnes, global wheat production would be 37 million tonnes below last year.
Global trade issues remain front and centre in the agricultural markets as well, with no signs of a quick resolution to the China/U.S. dispute.
U.S. President Donald Trump announced subsidies of US$12 billion for farmers in the country to help offset the negative impact of Chinese subsidies. That aid will be based off of new crop production.
Trump also made a claim that Europe would be buying more U.S. soybeans. Whether or not that holds true remains to be seen, as European buyers are private companies and not beholden to political directives.