Canola contracts on the ICE Futures exchange fell to their lowest levels of the past year during the week ended Oct. 26, as harvest operations across Western Canada finally neared completion.
Farmers in both Alberta and Saskatchewan reported good progress during the week, helping ease concerns over unharvested acres being left out over the winter.
It’s estimated that about 80 per cent of the country’s canola crop was in the bin by Friday. While the end may be in sight, that would still leave about four million tonnes of expected production out in the fields. That four million tonnes is enough to swing the market from tight to burdensome, which will move prices.
From a chart standpoint, canola prices hit their lowest levels of the past calendar year during the week, but managed to settle above major support. The January contract hit a session low of $489.40 on Oct. 25, but never settled below $490 per tonne. A sustained move below that mark could set the stage for a test of the $480-per-tonne level, with next support at $450 per tonne.
With the harvest moving forward, farmers were making heavy deliveries, which kept the commercial system well supplied. The latest Canadian Grain Commission weekly report showed farmer deliveries of 636,500 tonnes during the week ended Oct. 21, the largest single-week delivery in two years.
Meanwhile, both exports and the domestic crush are running slightly behind the year-ago pace, limiting the upside potential for prices.
In the United States, seasonal harvest pressure weighed on both soybeans and corn during the week, as improving Midwestern weather allowed farmers to make good progress.
While the ongoing trade dispute between the U.S. and China remains a bearish influence in the background, prices have reached a point that other buyers are coming forward to limit the losses.
January soybeans were finding good support around the US$8.50-per-bushel area, while December corn was looking hard pressed to move much below US$3.60 for the time being.
Wheat futures saw choppy activity during the week, falling sharply at one point before uncovering demand and bouncing the other way. While U.S. wheat is facing stiff competition on the world market, declining production prospects in a number of wheat-growing regions of the world were supportive. Talk that Russian exports may be slowing down, as the country runs low on exportable supplies, also kept wheat underpinned.