ICE Futures Canada canola strengthened on the week, as wet weather in Western Canada continues to put last year’s harvest on hiatus.
Fresh data from Statistics Canada painted a picture of this summer’s seeding, adding an element of spreading into the market.
In the week ending Friday, April 21, canola gained more than C$20 per tonne in the July contract. Old-crop values were propped up by ideas that canola supplies will be tight into the spring.
Wet weather last fall stopped harvest progress, leaving canola in fields to overwinter. Sogginess has continued to plague producers, as rain and snow throughout April has left fields too soft to get crops off.
Even more precipitation during the weekend, and forecasts for more to come, threw a kink into field work, increasing the likelihood that canola prices will continue to advance.
New-crop contracts saw more moderate gains in positioning ahead of and following StatsCan principal field crops acreage data for 2017-18 at the tail end of the week.
The November contract gained about C$12 in the week ending Friday.
Most traders had expected canola’s acres to increase this year, but the numbers released by Statistics Canada were at the high end of analyst expectations.
StatsCan pegged the commodity’s seeded area at a record-high 22.4 million acres.
That survey was conducted in March, and conditions closer to seeding time will likely cause adjustments to the figure, although this year canola remains one of the more profitable crops to grow in Canada based on returns per acre.
The Canadian dollar saw sharp declines in the week ending Friday, which also lent itself to strength in canola.
The Canadian dollar lost more than a full cent against its U.S.counterpart, closing at US$0.7404 or C$1.3506. Losses in the loonie make canola more affordable for international buyers.
While soybean acreage estimates released by Statistics Canada paled in comparison to the amount grown in the U.S., traders took note of Canada’s increased production, which is up by about 1.5 million acres.
Canadian farmers are expected to seed 6.956 million acres of soybeans this spring, up from last year’s 5.467 million.
In the week ending Friday, soybean futures at the Chicago Board of Trade lost about 5-1/2 U.S. cents per bushel in the July contract. Fund selling and competing supplies coming on stream from South America pressured those values.
Like soybeans, corn has felt pressure from supplies in other growing regions.
In the week ending Friday, corn lost more than 14 U.S. cents per bushel in the CBOT July contract.
The grain could gather support in coming sessions, however, as wet weather may cause some U.S. producers to seed soybeans instead, due to inability to get the earlier-planted commodity in the ground.
The winter wheat market saw sharp losses in the week ending Friday, losing close to 22 cents per bushel in Chicago.
U.S. wheat crops are in generally good condition, which is bearish.
Technical pressure was also a feature in that market.