By Glen Hallick, MarketsFarm
WINNIPEG, Dec 21 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts were stronger on Monday, reaching new highs due to weather concerns in South America and price rationing domestically.
Weekend rain in Brazil and Argentina is believed to have alleviated dry conditions only in Brazil for the time being. Argentina is forecast to receive more dry weather, which could curtail soybean production at harvest. However, the crop remains at an early stage in its development.
With concerns of low ending stocks for canola the markets have turned to price rationing to stem demand. Agriculture and Agri-Food Canada (AAFC) reported on Friday that canola ending stocks are to drop from approximately 3.1 million tonnes in 2019/20 to 1.2 million tonnes for 2020/21. Also, that’s a 46.7 per cent cut from AAFC’s November carryout estimate.
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A trader said profit-taking is bound to appear sometime before the markets close for Christmas, which would throw volatility into the mix.
At mid-afternoon the Canadian dollar was at 77.93 U.S. cents, compared to Friday’s close of 78.28.
There were 31,358 contracts traded on Monday, which compares with Friday when 31,547 contracts changed hands. Spreading accounted for 21,910 contracts traded.
Settlement prices are in Canadian dollars per metric tonne.
Price Change
Canola Jan 634.30 up 10.50
Mar 625.80 up 8.40
May 611.50 up 7.60
Jul 594.90 up 5.60
SOYBEAN futures at the Chicago Board of Trade (CBOT) were stronger on Monday, largely due to developments in South America, including weather.
The ongoing strike by grain inspectors and oilseed workers in Argentina has significantly curtailed exports. The Rosario Grain Exchange reported that exporters have met only 25 per cent of December soymeal commitments and all of 14 per cent of those for soyoil.
United States Congressional leaders reached an agreement on Sunday for a US$900 billion pandemic economic stimulus package. Support for the deal is not only coming from Republicans and Democrats in Washington, but also from the White House.
The U.S. Department of Agriculture reported 2020/21 export inspections of soybeans were more than 2.5 million tonnes for the week ended Dec. 17. Accumulated exports of 34.7 million tonnes are currently 75 per cent ahead of those in 2019/20.
CORN futures were higher on Monday, getting spillover support from soybeans and strong exports.
The USDA said corn export inspections were nearly 763,000 tonnes for the week. Accumulated exports were over 12.7 million tonnes, about 66.6 per cent ahead of the previous year.
China reported its hog herd has expanded by more than 30 per cent since November 2019. The sow herd is about 31 per cent larger. China’s hog industry was ravaged by African swine fever that resulted in culling a large portion of its hog population.
WHEAT futures were higher as well on Monday, riding the coattails of soybeans.
Wheat export inspections tallied more than 391,200 tonnes. Accumulated exports of 14.1 million tonnes are close to the pace compared to this time last year.
The U.S. markets are said to be expecting a growing number of wheat orders from China.
The excitement surrounding Russia’s announcement of an export tax of more than US$30 per tonne has quieted down. The tax is scheduled to be imposed in February and remain until June. The Russian government hopes the measure will curb rising domestic prices.
Ukraine reduced its grain export forecast for 2020/21 by 600,000 tonnes, bringing shipments to a projected 44.2 million tonnes. Wheat exports are to remain steady at 17.2 million tonnes.
All wheat ending stocks for Canada are forecast to rise from 5.5 million tonnes in 2019/20 to 6.8 million tonnes in 2020/21, according to the country’s agriculture ministry. The durum carryover is to jump by over 49 per cent to 1.1 million tonnes.
