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U.S. soy, Prairie weather help halt canola’s skid

A new USDA report was briefly bearish for corn and soy

ICE Future Canada canola contracts managed to halt their recent trek downward on the charts through a mix of weather issues, speculative buying and upward action in U.S. soybeans.

However, strength in the Canadian dollar and the continuing oilseed harvest throughout North America were still bearish forces for the commodity during the week ended Sept. 15.

Farmers were busy in the field sending roughly a million tonnes of canola into elevators during the first two weeks of September. Old-crop supplies continue to be tight, though, and demand is reasonably solid.

The main development over the past week was the release of the U.S. Department of Agriculture’s supply-and-demand report on Sept. 12.

That report weighed on canola as it predicted a record 4.43-billion-bushel soybean harvest in the U.S. It also projected higher-than-expected yields, at 49.9 bushels an acre.

While some participants in the industry don’t believe the crop will be that large, it’s still evident this year’s soybean crop will be massive.

One factor on the international front that helped support canola was the state of the canola crop in Australia. Although farmers Down Under planted roughly the same amount of canola as they did last year, the Australian Grains and Oilseeds Federation predicts this year’s crop will be just 1.68 million tonnes — the lowest amount since 2006-07, according to ABARES.

Most analysts feel a seasonal bump is coming for canola after harvest, though.

For the most part, corn futures on the Chicago Board of Trade held their own during the week ended Sept. 15. Prices fell on Tuesday when USDA released its monthly supply-and-demand report. The agency pegged the U.S. corn crop at 14.18 billion bushels, which was higher than expected. However, funds went bargain hunting the next day and the market returned to its pre-report trading range.

Soybeans were also pressured by the report, which estimated the U.S. soybean crop would be record large. However, after a momentary fall, the market took strength from ideas that USDA had overestimated the crop size and yield. Dry conditions in Brazil and a robust crush report also lent strength to soybeans.

The wheat market took strength from short-covering and weather problems in other countries. Crops in both Argentina and Australia have been stressed by poor weather, which was good news for U.S. exporters. The massive Russian crop, however, has been a bearish force on prices.

USDA’s 2017-18 wheat estimates were mostly unchanged from the previous report, so the market didn’t have to go through the same pressure as its corn and soybean counterparts.

About the author

Columnist

Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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