North American Grain and Oilseed Review: Loonie, soyoil push canola either way

CBOT in red prior to USDA reports

By Glen Hallick, MarketsFarm

WINNIPEG, Aug. 7 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts traded either side of steady on Friday. Support came from a lower Canadian dollar, but weaker Chicago soyoil weighed on values.

By mid-afternoon the loonie was at 74.66 U.S. cents, compared to Thursday’s close of 75.23.

Chicago soyoil was down by almost four-tenths of a U.S. cent, and European rapeseed was lower as well. Gains in Malaysian palm oil helped to temper further losses in canola.

A trader noted that canola often reacts slowly to changes in soyoil and other factors.

He also suggested next week could be volatile for canola. Dry conditions are threatening strong soybean crops in the United States Midwest, with little rain in the forecast. Also, the U.S. Department of Agriculture releases its supply and demand report on Aug. 12. The report should provide an accurate picture of where crops will be in the coming months.

The Canadian Grain Commission reported that canola exports for 2019/20 reached 10.1 million tonnes, for nine per cent increase over 2018/19. Domestic usage totaled 10.4 million tonnes, about 7.5 per cent more than the previous year.

There were 17,327 contracts traded on Friday, which compares with Thursday when 14,160 contracts changed hands. Spreading accounted for 7,644 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Nov 489.90 up 0.10
Jan 495.90 unchanged
Mar 499.70 dn 0.10
May 503.10 dn 0.70

SOYBEAN futures at the Chicago Board of Trade (CBOT) were weaker on Friday, due to fund selling.

On Aug.12 the United States Department of Agriculture releases its monthly World Agricultural Supply and Demand estimates, as well as its crop production report. Market expectations are for soybean yields to rise from 49.8 bushels per acre to 51.2.

The USDA announced a private sale of 456,000 tonnes of soybeans to China. Delivery will be during the 2020/21 marketing year.

Although dry conditions slightly improved in the U.S. Midwest, approximately 34 per cent of the region has been categorized as dry. Rain of up to a half inch has been forecast for Iowa and lesser amounts along the Mississippi River.

The Brazilian Association of Vegetable Oil Industries (Abiove) forecast soybean production in the country to be 130.5 million tonnes and exports of 80 million tonnes.

CORN futures were lower on Friday, with positioning ahead of Wednesday’s USDA reports.

Trade predictions put corn yields at 180.5 bu/ac., although at least one private estimate called for 184.0.

The Buenos Aires Grain Exchange reported the Argentina corn harvest has wrapped up and produced about 50.0 million tonnes.

WHEAT futures were steady to lower on Friday, also positioning ahead of the USDA reports on Wednesday.

The markets believe total U.S. wheat production will reach 1.83 billion bushels, of which two-thirds will be winter wheat.

France reported that 99 per cent of its soft wheat harvest is complete.

The BAGE dropped its estimate for Argentina wheat acres by 4.4 per cent to 6.5 million, due to dry conditions in some parts of the country.

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Futures Prices as of August 7, 2020

Canola
Price Change
Milling Wheat
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Durum
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New Barley
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Prices are in Canadian dollars per metric ton

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