The effects of Hurricane Harvey on soybean-growing weather and energy markets made for a choppy canola market during the week ended Aug. 31. The frenetic week ended with Statistics Canada’s production estimates, which made for an interesting question: was it bullish or bearish?
The initial response seemed to indicate investors were mildly reassured by the numbers, which failed to dip too heavily one way or the other. StatsCan pegged the 2017 crop at 18.2 million tonnes, which was within trade estimates.
However, the agency also hiked its 2016-17 production number from 18.4 million tonnes to 19.6 million. That confirmed what most analysts had been saying for a while, that Canada has more canola in its system than the official numbers indicate.
With the report in the books, canola will likely keep its focus on soybeans, weather and the direction of the Canadian dollar.
Harvest is well underway, with better-than-expected yields being reported in southern Alberta and Saskatchewan. There are some ideas that when results start coming in from the central and northern portions of the western Prairies, the size of the crop could rise even more.
Soybean farmers in the U.S. Midwest likely have Sept. 6 circled on their calendar. Temperatures are expected to be cool due to a full moon and there is an outside chance of frost. Weekly export data has been reasonably solid, though, and there are few indications the world has stepped back from its insatiable demand for oilseeds. Once the effects of Hurricane Harvey subside, growers in the Mississippi Delta will undergo damage assessments.
The corn market chopped around for the majority of the week before ending relatively flat. There were some ideas Hurricane Harvey could actually turn out to be a positive force for plant development as the storm pushed rain into corn-growing regions during the critical filling stage. However, there was speculation it could reduce the basis right when old-crop supplies began to make their way to market. Farmer selling and new-crop sales were both light.
As expected, Canada’s all-wheat harvest will be down significantly from last year. The agency pegged this year’s crop at 25.5 million tonnes, compared to 31.7 million last year. The shortage, coupled with drought-like conditions in Australia and India, has helped make life slightly easier for U.S. exporters. The U.S. crop has also suffered from drought stress this year. Both the Chicago and Kansas City markets’ front-month futures are trading above the US$4-a-bushel mark while Minneapolis this week is closer to US$6.50.