Canola contracts on the ICE Futures Canada platform soared to their highest levels in months during the week ended March 9, but ultimately fell back to earth after the U.S. Department of Agriculture hiked its estimate for U.S. ending stocks of soybeans.
The agency pegged the carry-out at 555 million bushels, about 25 million bushels more than the previous forecast. Exports in the U.S. also decreased by 35 million bushels to 2.065 billion, which exacerbated the ending stocks situation.
Not all the news was bearish, though, as USDA lowered its estimate for Argentina’s soybean crop to 47 million tonnes, well down from the previous estimate of 54 million. However, it wasn’t enough to outweigh the fallout from the carry-out situation.
The weather in Western Canada sent prices fluctuating early in the week as a low front from the northern U.S. moved into southern portions of Alberta, Saskatchewan and Manitoba and left sizable dumps of snow. This temporarily halted farmer selling for a day or two as many farmers were forced to wait for better road conditions. Soon the roads were cleared, though, and the selling continued, which dragged on values.
Other factors that helped undermine prices included poor export demand. There are also ideas that the canola carry-out could hit 2.5 million tonnes, about half a million tonnes higher than what most analysts were expecting in the latter part of 2017.
The moisture situation in Western Canada is also looking much better after the precipitation. Before the snow fell many areas of Saskatchewan and Alberta had virtually no ground cover.
The dominant May contract ended the week at $514.90 a tonne, roughly $13 lower than the March 2 close.
There had been ideas that bargain hunters might swoop in at the last minute and buy up some futures before the weekend, but uncertainty in the market discouraged any rallies.
In the U.S. it was a volatile week for soybeans as the USDA report sent futures reeling. The front-month May contract had been lingering near the US$10.75 mark but found itself under US$10.40 by Friday’s close.
Corn futures chalked up gains during the week, taking support from the USDA report, which lowered the production estimate for Argentina’s crop. The agency pegged the crop at 36 million tonnes, which compares with last year’s figure of 41 million. It also lowered the number for U.S. ending stocks.
Chicago wheat fell below the US$5/bu. mark in the May contract, weighed down by growing U.S. ending stocks and increasing Russian exports. Some precipitation fell on the U.S. Plains during the early portion of the week but it wasn’t enough to put a dent in the dryness concerns permeating the region.