North American Grain and Oilseed Review: Canola pulls back in correction

Soybeans continue lower, as corn, wheat correct

By Glen Hallick, MarketsFarm

WINNIPEG, Dec 2 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts were lower on Wednesday, in a correction from yesterday’s spike.

Chicago soyoil and European rapeseed continued lower today, which weighed on canola values. Gains in Malaysian palm oil provided a measure of support.

Thursday’s principal field crops report from Statistics Canada is widely expected to give canola a boost. The markets are expecting the federal agency to reduce its September forecast of 19.3 million tonnes of canola to possibly below 19 million. That lower production has also raised concerns about smaller ending stocks, which an analyst said could lead to price rationing.

The analyst also speculated canola should receive another boost from the next supply and demand estimates from the United States Department of Agriculture on Dec. 10. Any further reductions in ending stocks would be bullish in the U.S. markets with spillover into canola.

The Canadian dollar was slightly higher at 77.35 U.S. cents, compared to Tuesday’s close of 77.21.

There were 31,508 contracts traded on Wednesday, which compares with Tuesday when 32,530 contracts changed hands. Spreading accounted for 22,180 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Jan 579.60 dn 4.20
Mar 576.10 dn 3.00
May 572.70 dn 2.40
Jul 567.40 dn 1.60

SOYBEAN futures at the Chicago Board of Trade (CBOT) were lower on Wednesday, due to the South American weather.

Rain across central and southern Brazil helped to alleviate the dry conditions that have stressed recently planted soybean crops. The southern region, as well as Argentina, is forecast to receive more precipitation over the next six to 10 days.

ANEC, the Brazilian grain exporters association, issued a statement saying there won’t be any soybean shipments out of the country for the remainder of December. Brazil, the world’s largest soybean producer, oversold its soybean crop to China and has resorted to importing soybeans from the U.S.

Ahead of the next Brazil supply and demand report from CONAB, consultancy Datagro upped its forecast for the 2020/21 Brazil soybean crop from 134.44 million tonnes to 134.98 million. Futures International projected the crop to come in at 135.77 million tonnes.

Yesterday’s strike by oilseed workers and grain inspectors in Argentina came to a quick end overnight as negotiations are now underway. The labour dispute closed half of Argentina’s grain exports and halted nearly all of the oilseed processing. As port workers are seeking wage increases, several export companies said the demands were excessive.

United States President-elect Joe Biden stated he won’t immediately end tariffs on China that were imposed by the Trump administration. The incoming president also said he’s looking to build a consensus among Democrats and Republicans when comes to dealing with China.

CORN futures were higher on Wednesday, correcting from yesterday’s declines.

The U.S. Energy Information Administration (EIA) reported a 16,000 barrel per day drop in the production, with it averaging 974,000 BPD. However, ethanol stocks increased 374,000 barrels at 21.24 million.

Datagro lowered its projection for the Brazil corn crop from 114.48 million tonnes to 114.04 million.
Brazil reported its November corn exports were nearly 4.9 million tonnes. That’s an increase of just over 19 per cent compared to exports in November 2019.

WHEAT futures were stronger on Wednesday, in some in the markets were calling a ‘dead cat bounce.’

The U.S. Dollar Index remained weak with the greenback at 91.115 points, making U.S. wheat more attractive on the global market.

In international sales, South Korea purchased 31,600 tonnes of milling wheat from Canada and the U.S.

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Futures Prices as of December 2, 2020

Canola
Price Change
Milling Wheat
1970-01-01 00:00
Price Change
Durum
1970-01-01 00:00
Price Change
New Barley
1970-01-01 00:00
Price Change

Prices are in Canadian dollars per metric ton

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