North American Grain and Oilseed Review: Canola lacking in direction

By Glen Hallick, MarketsFarm

WINNIPEG, Sept. 18 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts were mixed Wednesday, as there was little to influence bids either way to a great extent. The front months were slightly lower and there were gains for the deferred months.

A weather premium has continued to be in place as late-seeded crops have become vulnerable to frost damage.

As the Prairie harvest pushes on, farmers have been keeping a large amount of canola from last year in their bins. Sooner or later that canola must be sold to help pay bills and make way for the new crop.

In Manitoba, approximately 40 per cent of the canola crop has been harvested, which is well behind the three-year average of 81 per cent complete.

The Canadian dollar was lower at mid-afternoon Wednesday at 75.25 U.S. cents after closing yesterday at 75.43.

There were 36,112 contracts traded on Wednesday, which compares with Tuesday when 28,947 contracts changed hands. Spreading accounted for 32,216 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Nov 452.30 dn 0.20
Jan 460.80 dn 0.10
Mar 469.00 dn 0.10
May 476.60 up 1.10

SOYBEAN futures at the Chicago Board of Trade (CBOT) were weaker on Wednesday as the momentum turned lower.

The weather forecast has called for above normal temperatures lasting to mid-October. Such will aid late developing crops and reduce the possibility of frost.

Ahead of top-level trade talks between the United States and China, officials from both countries will begin negotiations today in Washington, D.C. Recently China made some gestures of goodwill to the U.S. by purchasing approximately 720,000 tonnes of soybeans and exempting the crop and other U.S. goods from tariffs. A global economic recession is expected without a deal to resolve the U.S./China trade war. Due to that worry, the U.S. Federal Reserve cut interest rates today by 25 basis points to help spur the U.S. economy.

With the export sales report from the U.S. Department of Agriculture (USDA) released tomorrow, trade estimates projected soybean sales of 700,000 to 1.15 million tonnes. Soymeal projections were zero to 100,000 tonnes of old crop and 175,000 to 250,000 tonnes of new crop. Soyoil sales were estimated to be zero to 10,000 tonnes of old crop and 5,000 to 10,000 tonnes of new crop.

Crude oil prices continued downward as Saudi Arabia announced its Abqaiq oil processing facility will be fully back online by the end of this month. The facility was attacked by drones on Sept. 14, with Houthi rebels from Yemen having claimed responsibility. However, the U.S. accused Iran, Saudi Arabia’s arch-rival, of being behind the attack, to which Iran has denied.

Rainfall has delayed soybean planting in Brazil. Market expectations pegged the Brazilian crop to exceed 122.0 million tonnes.

The USDA reported on Wednesday that European Union rapeseed production will be significantly lower in 2019 than last year. This year EU farmers were projected to harvest about 17.80 million tonnes, for a drop of 11 per cent from 2018 and making it the smallest crop since 2008. Three consecutive years of dry conditions were said to be the cause.

The day after African swine fever was reported in South Korea, the deadly disease to pigs has now been discovered in Thailand. Approximately 200 hogs were culled in an effort to halt its spread in Thailand. African swine fever has wiped out 40 per cent of China hog population and at least 10 per cent of Vietnam’s. The disease has also been reported in North Korea, the Philippines and Eastern Europe. Mercado Analysis stated that 25 per cent of the world’s hogs have been culled since August 2018.

CORN futures were higher on Wednesday, with spillover from wheat and short covering.

A report stated that U.S. President Donald Trump will approve a plan to increase biofuel blending requirements by another 10 per cent next year. The move would help boost the demand for corn. Recently the Trump administration issued a record number of waivers that exempted oil producers from blending biofuel with their fuel. The move slashed corn demand and saw numerous biofuel plants close or cut production.

Market expectations predicted export sales of corn to be 700,000 to 1.50 million tonnes for the current crop year, and 60,000 to 80,000 tonnes for the new crop year.

The weekly ethanol report stated production in the U.S. was 1.00 million barrels per day (BPD), down 20,000 BPD from the previous week. Inventories reached 23.2 million barrels for an increase of 700,000.

WHEAT futures were stronger on Wednesday, due to dry conditions in Argentina and Australia.

Market expectations for export sales of wheat were 400,000 to 600,000 tonnes for the current crop year, and zero to 25,000 tonnes for the new crop year.

Egypt purchased 180,000 tonnes of wheat from Russia.

Brazil was said to be looking to import about 750,000 tonnes of wheat from the U.S. and possibly Canada.

Traders requested the Ukrainian government increase its cap on wheat exports from 19.0 million tonnes to 20.0 million.

Futures Prices as of September 18, 2019

Canola
Price Change
Milling Wheat
1970-01-01 00:00
Price Change
Durum
1970-01-01 00:00
Price Change
New Barley
1970-01-01 00:00
Price Change

Prices are in Canadian dollars per metric ton

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