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North American Grain and Oilseed Review: Profit-taking likely behind today’s losses

By Glen Hallick, MarketsFarm

WINNIPEG, Oct. 9 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts were lower Wednesday, for the first loss after seven consecutive trading sessions of gains.

One analyst stated there was likely profit-taking today, ahead of the October supply and demand report to be released tomorrow by the United States Department of Agriculture. That report, he said, could bring volatility to the markets.

The cold front that brought freezing temperatures with snow and rain to Alberta and Saskatchewan yesterday, struck Manitoba today. As well, Manitoba has been forecast to get a Colorado Low that will bring more precipitation, most likely snow. Of the Prairie Provinces, Manitoba has been hardest hit with wet conditions since the beginning of September.

The Canadian dollar was slightly lower at mid-afternoon Wednesday at 75.01 U.S. cents, after closing yesterday at 75.06.

There were 39,086 contracts traded on Wednesday, which compares with Tuesday when 30,964 contracts changed hands. Spreading accounted for 32,956 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Nov 463.30 dn 1.50
Jan 471.80 dn 1.50
Mar 480.40 dn 1.40
May 487.60 dn 1.00

SOYBEAN futures at the Chicago Board of Trade (CBOT) were higher on Wednesday due to a storm hitting major growing areas and good news on United States/China trade talks.

Winter-like weather swept across the U.S. Midwest and Northern Plains on Wednesday. Cold, wet conditions that includes snow in a number of regions, will again delay harvesting and raise concerns about crop conditions, especially with freezing temperatures.

Top-level trade talks between the U.S. and China resume tomorrow in Washington, after being on hold for about two months. China said it’s open to a partial trade deal if the U.S. doesn’t impose further tariffs. Such an agreement would likely include China buying more U.S. agriculture products. There are unconfirmed reports of China willing to buy 10 million tonnes of U.S. soybeans in addition to what they have purchased so far this year.

The U.S. Department of Agriculture (USDA) releases its monthly supply and demand report tomorrow at 11 am CDT. Trade expectations are for the USDA to lower it yield and production estimates in the October World Agriculture Supply and Demand Estimates (WASDE). Market expectations are for soybean yields to slip from 47.9 bushels per acre (BPA) to 47.3. That would result in production dropping from 3.63 billion bushels to 3.58 billion. The carryout was projected to decline from 640 million bushels to 510 million.

Ahead of tomorrow’s weekly export sales report from the USDA, trade expectations called for soybean sales of 1.3 million to 2.0 million tonnes. Soymeal sales for 2018/19 are expected to be zero to 100,000 tonnes, and those for 2019/20 were estimated to be 100,000 to 300,000 tonnes. Predictions for soyoil sales are projected to be zero to 10,000 tonnes for 2018/19 and 5,000 to 35,000 tonnes for 2019/20.

CORN futures were slightly lower on Wednesday due record low demand in the U.S. coupled with record high exports from Brazil and Argentina.

So far this marketing year, Brazil has exported 29.5 million tonnes of corn, which more than double this time last year. Analysts predict Brazil could hit 36.0 million tonnes this year.

Argentina has exported 24.9 million tonnes of corn so far this marketing year, which already above the record of 24.5 million tonnes in 2016.

Market projections for U.S. corn in the next WASDE forecast yields dropping from 168.2 BPA to 167.5, with production down from 13.80 billion bushels to 13.68 billion. The carryout was predicted to go from 2.19 billion bushels to 1.68 billion.

With tomorrow’s export sales report, the markets have called for corn sales of 500,000 to 800,000 tonnes.

The Energy Information Administration (EIA) reported ethanol production of 963,000 barrels per day (BPD) for the week ended Oct. 4, for a gain of 5,000 BPD from the previous week. Ethanol stocks fell by almost 2.0 million barrels to a two-year low of 21.2 million barrels.

WHEAT futures were mixed on Wednesday, with modest gains for Kansas City, steady to lower for Chicago and small losses for Minneapolis.

Trade expectations for tomorrow’s supply and demand report called for the wheat carryout to remain close to the September estimate of 1.01 billion bushels.
Markets predictions for wheat export sales are 300,000 to 600,000 tonnes.

Australia’s wheat production for the current marketing year was revised downward to 18.0 million tonnes due to dry conditions throughout much of the country, according to the USDA’s attaché in the country. However, that would still be 700,000 tonnes more than the previous year, but 25 per cent below the 10-year average.

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Canola
Price Change

Prices are in Canadian dollars per metric ton

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