It was a sad week for the ICE Futures canola market ending Nov. 16. The January contract dropped below the $480-per- tonne mark and while many may hope it will go back higher, they should also prepare for it to go lower still.
January canola flirted with the $480-per-tonne mark all week; there were days it looked like it was going to hold and even had support there. Some days it would dip below but then spring back up again. However, by the end of the trading day on Nov. 16, it had sunk below $477 per tonne.
For the most part canola was taking its lead from the Chicago Board of Trade soybean complex. The soybean market was in a tizzy all week, as traders tried to sort out conflicting reports from the White House on the China situation. As in weeks past, soybean contracts would shoot up at the sign of any positive trade war news and drop with any bad news.
Friday did see the soybean market end in the green; however, soyoil contracts, which canola follows for the most part, were weaker. U.S. President Donald Trump told reporters on Nov. 16 that China wants to make a deal on trade and the U.S. may not need to impose further tariffs. Initially soybean contracts shot up in value, but as the day wore on they settled with only modest gains. This could be a sign that the trade is finally starting to see it can’t react solely based on what Trump says or tweets.
The soybean situation with China will have a lasting effect on global trade, or at least that’s what those attending the annual Grain World conference in Winnipeg were told. Analysts at the conference during the week said they think trade patterns will be permanently changed by the trade war.
Another victim of the trade war will be the canola market. During the oilseed outlook, Greg Kostal, president of Kostal Ag Consulting, said he expects the canola market to dip down another $30 per tonne in 2019 due to the current soybean situation. Most traders who were asked afterward seemed to agree this is the way the market is going. One even remarked if producers can get $11-per-bushel canola contracts for next year’s crop currently, they should be locking it in.
The U.S. corn market took a beating as more reports of African swine fever came out of China. Wheat markets bounced around during the week, lacking a clear direction. Data from the U.S. Department of Agriculture (USDA) showed U.S. winter wheat seeding and growth behind schedule. Conditions could get worse, though, as snow has set in, in the U.S. Midwest, halting seeding and harming winter wheat emergence.