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Trade’s outlook for U.S. soybeans bearish on canola

Wheat stocks limit any upside from lower U.S. acres

Speculation ahead of a much-anticipated dataset from the U.S. Department of Agriculture had ICE Futures Canada canola chopping around a wide range in the week ending March 31.

USDA released its prospective plantings and grain stocks reports on March 31. The department’s seeding estimates often act as a major mover in markets, leaving values with double-digit gains or losses.

This year’s estimates were projected to be bearish for soybeans at the Chicago Board of Trade (CBOT), and lived up to expectations. U.S. soybean-planted area for 2017 is estimated at a record-high 89.5 million acres, up seven per cent from last year, USDA said.

The less anticipated, though still important, stocks report added to the bearish tone in soybeans.

Soybeans stored in all positions in the U.S. on March 1 totalled 1.73 billion bushels, up 13 per cent from the same time frame a year prior, the U.S. agency said.

Soybean futures were also feeling the bearish effects of competing supplies emerging from South America. Brazilian producers are finishing harvest and will be taking supplies to ports throughout April.

Those weaker soybean prices pressured canola, moving the market lower on the week.

Canola is feeling the consequences of ample soybean stocks, though the supply situation in the Canadian market is tilted toward bullish.

Traders expect canola supplies could be tight moving into the spring. Crops that were left to overwinter will soon be coming out of fields, revealing the amount and quality of those supplies — which some expect will not be good.

Those expectations are lending canola some independent strength, but not enough for the market to shrug off the bearish effects of supplies south of the border.

The Canadian dollar was mostly rangebound on the week, which did little to sway canola either way.

Corn

The expectation for a lower amount of corn to be seeded this year allowed the CBOT corn market to advance on the week, though heavy stocks limited the market’s upside.

Corn seeded in the U.S. in 2017 is expected to reach 90 million acres, down four per cent from the year prior, USDA said.

Stocks of corn as of March 1 totalled 8.62 billion bushels, up 10 per cent from last year. That tempered gains, along with competing supplies from South America.

Wheat

CBOT wheat futures also edged up on the week, as U.S. seeded area is expected to decline on the year. All U.S. wheat planted area for 2017 is estimated at 46.1 million acres, down eight per cent from 2016, USDA said.

However, heavy stockpiles of the grain, amid a bearish supply-and-demand situation, limited the market’s upside and could further pressure values moving forward.

All wheat stored in all positions on March 1 totalled 1.66 billion bushels in the U.S., USDA said, up 21 per cent from the same time frame a year prior.

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