North American Grain/Oilseed Review: Canola backs away from resistance

By Phil Franz-Warkentin, MarketsFarm

WINNIPEG, Aug. 10 (MarketsFarm) – The ICE Futures canola market was weaker on Monday, backing away from nearby chart reistance.

The most active November contract briefly traded above the psychological C$490 per tonne level in overnight trade, but ran into resistance and turned lower. Speculators had recently built up a net long position in canola for the first time in nearly two years, and chart-based positioning accounted for some of the selling.

The looming Prairie harvest, relatively favourable crop prospects and strength in the Canadian dollar added to the softer tone.

However, Chicago Board of Trade soybeans were higher on the day, providing some underlying support.

The United States Department of Agriculture releases updated production estimates on Wednesday, and pre-report positioning was a feature in the North American grains and oilseeds.

About 14,473 canola contracts traded on Monday, which compares with Friday when 17,327 contracts changed hands. Spreading accounted for 7,336 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were stronger on Monday, as solid export demand provided support.

The United States Department of Agriculture reported private export sales of nearly 600,000 tonnes of soybeans to China in two separate releases this morning, with an additional 111,000 tonnes to unknown destinations.

Weekly export inspections were also up on the week, but behind the year-ago level.

General expectations ahead of Wednesday’s USDA production report are for an increase in average U.S. soybean yields and production near 4.2 billion bushels. That would be up by about 124 million bushels from an earlier estimate.

CORN futures were also up on the back of solid export demand on Monday.

Weekly U.S. corn export inspections of 1.1 million tonnes were the largest shipments since June, with China a major destination.

Corn yields and production are also expected to be revised higher in Wednesday’s USDA report, and pre-report positioning was a feature.

WHEAT futures were lower on Monday, seeing a continuation of the previous week’s slide.

Weekly U.S. wheat exports of 380,000 tonnes were down on both the week and the year, although total year-to-date exports were still running slightly ahead of the year ago pace.

The U.S. winter wheat harvest is about 90 per cent done, keeping some pressure on the market.

Rising production estimates out of Russia also weighed on wheat prices.

Futures Prices as of August 10, 2020

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Milling Wheat
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New Barley
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Prices are in Canadian dollars per metric ton

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