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North American Grain/Oilseed Review: Canola strengthens with smaller crop

By Phil Franz-Warkentin, Commodity News Service Canada

Winnipeg, Dec. 6 (CNS Canada) – ICE Futures canola contracts were stronger in the most active months on Thursday, although activity was choppy as a number of conflicting influences pulled on the market.

A downward revision to Statistics Canada’s canola production estimate provided underlying support. The government agency pegged the 2018-19 crop at 20.3 million tonnes, which was at the lower end of trade estimates and one million tonnes below the previous year’s production.

Weakness in the Canadian dollar was also supportive for canola, as the declining currency underpinned crush margins.

However, losses in Chicago Board of Trade soybeans and soyoil tempered the upside amid renewed concerns over trade relations between the United States and China.

The general technical outlook also remained pointed lower for canola, which made any gains a selling opportunity from a chart standpoint.

About 34,120 canola contracts traded, which compares with Wednesday when 27,704 contracts changed hands. Spreading accounted for 25,700 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were weaker on Thursday.

The arrest of a senior executive with China’s Huawei Technologies Company took all of the trade optimism out of the soybean market that had built up after China and the United States agreed to a tentative truce over the weekend.

Canadian authorities arrested Meng Wanzhou, a top executive with Chinese technology company Huawei and daughter of the company’s founder, at the request of the U.S. The arrest was linked to U.S. sanctions against Iran and is seen as threatening the tentative trade truce between the U.S. and China.

World equity and energy markets were also down on the day, leading to some spillover selling in soybeans.

Large crop projections out of South America also weighed on values.

The U.S. Department of Agriculture releases its monthly supply/demand estimates on Dec. 11, and pre-report positioning was another feature.

CORN futures were also pressured by the trade worries. However, the losses were tempered by solid export demand.

The USDA announced flash sales of 198,000 tonnes of U.S. corn to Mexico this morning.

The weekly export report was delayed until Friday.

WHEAT futures were lower on Thursday. While U.S. wheat is thought to be looking more competitively priced on the world market, the country continues to miss out on export business.

Canada’s 2018 wheat crop was pegged at 31.8 million tonnes by Statistics Canada. That was in line with trade estimates, but well above the 30.0 million tonne crop grown the previous year.

Commodity Future Prices

Canola
2018-12-06 13:19
Price Change
Jan486.101.40
Mar493.301.30
May501.001.50
Jul506.400.40

Prices are in Canadian dollars per metric ton

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