The ICE Futures canola market flatlined during the second week of November, trading within a rather narrow sideways range and showing little incentive to break one way or the other.
The steady tone came despite a sizable drop in Chicago Board of Trade (CBOT) soyoil prices, as world vegoil markets backed off nearby highs. Soyoil had started the week near its strongest levels of the past year, while Malaysian palm oil hit two-year highs before profit-taking came forward to weigh on prices.
However, concerns over tight supplies of vegetable oils are expected to remain supportive, and canola is looking relatively cheap compared to other oilseeds right now.
Domestic crushers have processed 2.9 million tonnes of canola during the crop year to date, about 600,000 tonnes ahead of the year-ago pace. Meanwhile, exports of 2.3 million tonnes are only 150,000 tonnes off the 2018-19 level.
Canada’s ongoing diplomatic dispute with China continues to limit seed movement to the country. However, China remains the largest export destination for Canadian canola oil. Canada shipped roughly 160,000 tonnes of canola oil to China during the first two months of the 2018-19 marketing year, according to the most recent Canadian customs data. That was only slightly off the previous year’s pace.
In addition, Canadian canola seed exports to the United Arab Emirates are up sharply on the year, as the UAE’s crushing industry is thought to be selling more canola oil to China.
About 10 per cent of Canada’s crop may end up overwintering to be harvested in the spring or written off completely. However, for all of the individual hurt the poor fall weather caused, the bigger-picture market outlook appears content with the size of the canola crop, at least. Even with the good processor demand, supply/demand tables still point to a sizable canola carry-out of at least three million tonnes or more.
U.S. grain and oilseed futures also held relatively steady during the week. Seasonal harvest pressure is starting to fade in the country, with attention soon shifting to South American crop prospects.
Impeachment hearings underway against U.S. President Donald Trump cast an extra layer of caution over international trade talks during the week, but the general sentiment appeared somewhat optimistic as far as negotiations between China and the U.S. are concerned.
Any actual agreement is still far from being signed, but China remains a large customer for U.S. soybeans and the talk of more talks was enough to underpin Chicago futures.