North American Grain and Oilseed Review: Higher loonie curbs canola purchasing

By Glen Hallick, MarketsFarm

WINNIPEG, Jan. 20 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts finished steady to lower Monday, spurred on by the rise in the Canadian dollar.

By mid-afternoon Monday, the loonie climbed to 76.64 U.S. cents, compared to Friday’s close of 76.56. The stronger dollar made canola less attractive to importers.

However, prices were slightly higher for most of the session. There was anticipation that the Chicago soy complex could move up tomorrow when they reopen after Martin Luther King Jr. Day.

The belief is China may soon begin its purchases of the additional U.S. agricultural products agreed to in the Phase One trade deal signed last week. That purchasing could lead spillover into canola, according to a trader.

But he cautioned that China could delay their purchases until there are more South American soybeans on the global market.

There were 10,968 contracts traded on Monday, which compares with Friday when 17,596 contracts changed hands. Spreading accounted for 8,264 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Mar 481.00 unchanged
May 489.80 up 0.10
Jul 494.10 dn 0.60
Nov 496.60 dn 1.20

The U.S. Department of Agriculture (USDA) will issue its weekly export inspection report on Jan. 21 and its weekly export sales report on Jan. 24.

Despite the U.S./China trade war, U.S. farm incomes rose 10 per cent higher year-over-year to reach their highest levels in six years, according to the USDA. A good portion of that was the tens of billions the Trump administration paid out to farmers hurt by the dispute.

Dry conditions in South America could affect soybean crops in Argentina and Brazil. Although both countries were forecast to have record soybean production this year, dryness in some parts of each country might see amounts revised slightly downward.

Relations between India and Malaysian continued on a sour note, as the trade ministers from each country won’t meet each other at the world economic forum this week in Davos, Switzerland. After the Malaysian government criticized the Indian government for its highly controversial citizenship law, the latter sought to halt palm oil imports from Malaysia. India’s new citizenship law is said to discriminate against Muslims.

Although a tender from India for 6.9 million bushels of non-GMO corn closed on Jan. 14, the order wasn’t filled. The Metals and Minerals Trading Company of India indicated it would still consider offers. Shipment was slated for Feb. 10.

South Korea issued a tender for 2.6 million bushels of corn, with arrival in April.

There has been talk of China purchasing more U.S. wheat, but no deals have yet to surface. Otherwise the U.S. Department of Agriculture expects the 2019/20 marketing year to end with a record high global carryover.

Farmers in India are set to plant a record amount of wheat acres in 2020, with projects of nearly 81.6 million acres. Post-monsoon rains maintained adequate soil moisture levels to allow for greater planting.

However farmers in the European Union are expected to plant fewer acres of wheat this year due to wet conditions in parts of the United Kingdom, France and Italy. Also, dry conditions in Spain may reduce durum acres. MarketsFarm projects 62.89 million wheat acres in the EU, down from more than 64.25 million acres in 2018/19.

Futures Prices as of January 20, 2020

Price Change
Milling Wheat
1970-01-01 00:00
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New Barley
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Prices are in Canadian dollars per metric ton

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