Canola futures on the ICE Futures Canada trading platform moved lower during the week ended Nov. 1, though the market bounced around on both sides of unchanged throughout the week.
Spillover pressure from the losses in Chicago soybeans, the advancing U.S. soybean harvest and expectations of a record-large South American oilseed crop were bearish.
The large Canadian canola supply situation also continues to overhang the market, as many traders still believe that the crop is larger than Statistics Canada’s record-large estimate of 15.963 million tonnes. How big the 2013-14 Canadian canola crop turns out to be won’t be confirmed until Dec. 4, when StatsCan releases its next production report.
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However, general weakness in the value of the Canadian dollar, as it remained below the US96-cent mark during the week, was supportive, as was spillover support from the gains seen in outside vegetable oil markets.
But overall, canola futures were lacking direction during the week amid a lack of fresh news. Though there are still fundamentals at play, most of them have already been priced in, or are close to being priced in.
Canola futures should continue in a choppy, directionless pattern until some fresh news is released — namely the Nov. 8 world agricultural supply-and-demand estimates (WASDE) report from the U.S. Department of Agriculture. Until then, any gains will be seen as good selling opportunities — and losses as good buying chances.
The Nov. 8 report will be USDA’s first in two months, as there was no October data released due to the U.S. government shutdown. Because the market was missing the October information, even more importance will be placed on the Nov. 8 data.
Traders in the U.S. are also waiting for the upcoming WASDE report before making any big moves, so Chicago corn and soybeans and all three wheat futures should also continue in a rangebound pattern overall until it is released.
Chicago soybean futures moved sharply lower during the week, with much of the selling linked to the advancing U.S. soybean harvest and expectations of a record-large South American soybean crop.
There is still a little bit of uncertainty surrounding how big the U.S. crop will be, due to the missing USDA October report, but yields and production estimates should be confirmed in the Nov. 8 report. Pre-report expectations are calling for a 3.298-billion-bushel soybean crop, which is up from USDA’s previous estimate of 3.149 billion bushels.
Some traders expect that the U.S. corn crop will be larger than 14 billion bushels this year, which is why the Chicago corn futures continued their downtrend slide during the week. USDA’s current estimate calls for a 13.843-billion-bushel corn crop.
All three U.S. wheat futures moved lower during the week, as traders didn’t see any reason to keep prices up at recent highs amid a lack of fresh news. Oversold price sentiment and speculative selling were also bearish for wheat futures.
The upcoming USDA report will also be important for U.S. wheat futures, as it will help shine some light on how big the global wheat crop will be.
There have been reports of problems for wheat crops in the Black Sea region, Argentina and Australia recently. The report should show how much of an impact those recent problems will have on global wheat production.
