By Glen Hallick, MarketsFarm
WINNIPEG, March 27 (MarketsFarm) – ICE Futures canola contracts were weaker at the end of trading on Wednesday, as tensions between Canada and China has continued to weigh on values.
Canadian Prime Minister Justin Trudeau said on Tuesday he will consider sending a high-level delegation to China to discuss the ongoing situation between the two countries. His announcement came after China banned Viterra from selling canola to the country.
China took the action against Viterra yesterday in the same fashion it banned canola shipments from Richardson International earlier this month – in that Chinese authorities alleged they found hazardous pests in the shipments.
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The dispute stems from the arrest of Huawei executive Meng Wanzhou by Canadian authorities in December at the request of United States authorities. Meng is now facing extradition to the U.S., where she faces fraud charges.
The Canadian dollar was down at 74.57 U.S. cents by mid-afternoon on Wednesday, which provided some support.
Support also came from canola now being more competitive with other vegetable oils and improvements in the crush margins.
About 13,555 contracts were traded on Wednesday, which compares with Tuesday when approximately 24,000 contracts changed hands.
SOYBEAN futures at the Chicago Board of Trade were weaker on Wednesday.
Trade talks between the United States and China are set for Thursday and Friday in China, with a Chinese delegation travelling to the U.S. next week for further negotiations. While a final deal is still expected by the end of April, there are indications it might be delayed. U.S. President Donald Trump wants a deal completed no later than the 2020 Presidential Election, which kicks off early next year.
There are indications that tariffs the U.S. and China have imposed on each other in their trade war will not cease immediately with a final agreement. Rather, the tariffs could be gradually eliminated.
The U.S. Department of Agriculture releases two reports on March 29, its Prospective Planting report and its Grain Stocks report. Traders have been positioning themselves ahead of Friday.
The American Farm Bureau has estimated there is US$76 billion of corn and soybeans in the Mississippi and Missouri River basins that could be at risk to flooding. The National Oceanic and Atmospheric Administration has forecast unprecedented flooding this spring in those basins.
CORN futures were also weaker on Wednesday, as Ukraine’s exports are up. As of March 21, Ukraine’s exports stand at 302.3 million tonnes for an increase of 22.7 per cent year-over-year.
WHEAT futures were stronger on Tuesday on news that Russia’s wheat exports were down. The country’s exports dell 5.2 per cent in 2018-19 compared to a year ago. Russia expects to export 486.1 to 499.7 million tonnes of wheat this marketing year.
