Meanwhile, StatCan found the July soybean crush was slightly lower than in July 2022.

The federal agency pegged the canola crush for last month at 961,683 tonnes, up 24.25 per cent from the previous July. The previous July record was 854,510 tonnes in 2019; the overall record of 957,952 tonnes was in March 2021.

The amount of oil produced this past July rose 24.2 per cent at 402,886 tonnes, but well short of the record of 416,849 tonnes in March 2021.

Canola meal produced increased 22.5 per cent July over July at 567,153 tonnes. That as well made for a new record, besting the 545,992 tonnes in March 2023.

At 151,621 tonnes, StatCan found a 5.3 per cent decline in the country’s soybean crush. That resulted in a 6.5 per cent drop in oil produced at 28,497 tonnes and meal produced was down 5.4 per cent at 118,483 tonnes.

Table: Canada’s July crush, in metric tonnes. Source: StatCan.

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Limited and choppy trading in nearby soybean contracts had pulled down canola for most of the week, according to Winnipeg-based independent trader Jerry Klassen.

“When the March got up to $868-$870 (per tonne)… there was still some farmer selling at the higher levels,” he said. “Everyone who wanted to sell at that level has likely done so at this time and secondly, (farmers) are not going to make any sales until mid-January.”

On Tuesday and Wednesday, however, canola prices made a comeback, with the March contract rising by $11.50 per tonne in that span.

“We’re seeing some strength in the (soyoil) futures here. It’s largely setting the direction for the canola,” he said. “Canola is garnering some of that strength, spillover support into the domestic crush margins.”

Klassen added that commercial stocks are at 1.2 million tonnes, which he considers to be “snug.” Add in limited farmer selling and an inverse in the ICE Futures market and he believes canola is striking a bullish tone.

“You’ve got the bean oil and the bean meal improving the crush margin structure and it’s giving us a steady tone,” he said. “We’re kind of winding down for the holiday season, but we could see the funds start to come in here on the buy side because the market has held above the 20-day average over the last two days.”

He expects a softer tone until New Year’s Day.

“You have outside influences. It looks like there are beautiful (soybean growing) conditions in Brazil. Argentina’s on the dry side, but they still have time,” Klassen said. “The commercial demand kind of goes to sleep over the holiday season, until the second week of January.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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Since nearly hitting the $900 per tonne mark on Nov. 15, the January canola contract declined for eight straight sessions before going as low as $803.50/tonne on Nov. 28. The price then recovered, but not as high as $850/tonne.

While Chicago soyoil dropped three U.S. cents per pound in the span of a half-hour on Nov. 30, hindering canola’s upward movement, soyoil later recouped most of its losses in the session.

“Canola is slowly starting to recover some of its value against the oil and meal values,” Ken Ball of Winnipeg-based PI Financial said. “The crush spreads have been astoundingly wide… and they’ve been ridiculously (fueled) by speculative trade.”

The January canola crush margin on Tuesday was $312.27 above the futures, according to ICE — a $64.33 increase from one month ago and a $34.31 jump from the previous week.

Ball added that canola did not go below $800/tonne because of support from strong soyoil prices, which then triggered canola’s rise to $850/tonne.

“That will be the range for now, but there’s room for (the price) to swing quite significantly because of the extremity of the moves in the crush margins,” he said.

“It’s quite possible over time those crush margins will come back towards normal levels. We expect crush margins are going to stay high.”

However, this will create a dilemma for the export market.

“If we’re going to export canola, it can’t trade relative to those oil and meal values or Canadian canola will get too expensive in world markets. Once Australian canola flushes through the system over the next few months, canola margins should start to tighten up again to more normal levels,” Ball said, adding that many end-users of canola are both crushers and exporters.

“They would certainly much rather crush the canola than export it. There would be a tendency to downplay exports and work on crush. But we only have so much crush capacity, we still have to rely on exports.”

Further affecting canola prices going forward, according to Ball, will be whether Chicago soyoil prices continue to trade at higher levels compared to other vegetable oils.

This week, the U.S. Environmental Protection Agency (EPA) is set to announce its biofuel blending mandate for 2023, which may affect vegetable oil markets.

“There is a lot of chatter and talk about the blends for ethanol and biodiesel,” Ball said. “Soyoil stocks are looking a little bit tighter this year and that’s because of increased biofuel usage. So there’s some pressure on them to start slowing that down a little bit.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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Comparing fababean and feed pea prices to other feed grains, the report stated, “Grains are softening further on the Prairies with the expectation of reduced canola planting this spring and increased barley and wheat acres.”

Fababean prices are currently highest in central Saskatchewan, reaching up to $319.19 per tonne. Comparatively, the lowest price observed in all three regions for feed barley is only $236 per tonne.

Feed pea prices were highest in central Alberta, hitting up to $311.90 per tonne. Feed barley was also reported as high as $247 per tonne.

Soybean meal, another competitive feed ingredient, is fetching prices around $515 per tonne in central Alberta, the highest in the Prairies, where comparatively, fababeans are only around $314.44 per tonne, and feed peas, again, at $311.90.

“Soybean meal has remained flat despite downward pressure with reduced trade to China, while DDGS (distillers dried grains with solubles) price has also softened,” according to the report.

Ahead of the planting season, the report predicted “prices may have some firmness in the short term but with downward pressure over the medium to long term.”

Looking ahead, Canada’s trade relationships with India and China will continue to weigh on values.

There are “still a lot of variables at play, though, with a lot contingent on weather and trade spats,” the report concluded.

In total, Canada produced 91,300 tonnes of fababeans and over 3.5 million tonnes of feed peas in 2018.

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China imported about 87 per cent of its soybean needs last year and one-third of that came from the U.S., according to a report in the South China Morning Post.

The proposal remains open for comment until Oct. 15. The association said the move was designed to reduce the country’s reliance on foreign suppliers, although it did not mention its trading relationship with the U.S. by name.

U.S. biofuel refueled

U.S. President Donald Trump’s plan to eliminate the ban on summer sales of gasoline with 15 per cent ethanol content, also known as E15, is going down well in corn country, according to reports by Associated Press.

Trump said he wanted to boost energy production and to help farmers and refiners.

“The president’s action isn’t just a win for corn farmers and the ethanol industry, motorists everywhere will now be able to fuel up at the pump year-round with E15… that’s what I call good news for all of us,” Illinois Corn Growers Association president Aron Carlson said in a statement.

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Soybean futures set a two-week low on forecasts for much-needed moisture in parts of Argentina, and corn sagged as well.

Chicago Board of Trade March wheat settled down 6-1/2 cents at $4.40-1/4 per bushel (all figures US$). March soybeans were down nine cents at $9.69-3/4 a bushel and March corn was down 2-3/4 cent at $3.58-3/4 a bushel.

All three commodities declined after the U.S. Commodity Futures Trading Commission’s weekly commitments report on Friday showed that funds had cut their net short positions in grains and soy aggressively, leaving the market open to a round of fresh short-selling.

The supplement to the CFTC’s weekly commitments report showed large speculators in the week to Jan. 30 slashed their net short position in CBOT wheat by about 48,000 contracts, in soybeans by about 62,000 contracts and in corn by about 101,000 contracts.

“The short-covering was far beyond what the daily indications would suggest,” said Tom Fritz, a partner with EFG Group in Chicago.

Also, storms this week should bring beneficial moisture to U.S. winter wheat areas, with snow in the Midwest and rain in the Southeast.

Soybean futures came under pressure from rains expected next week in dry areas of Argentina, the world’s No. 3 soybean grower and the No. 1 exporter of soybean meal, used as animal feed.

“I’m seeing rain this weekend and some showers between Thursday and Friday of next week,” said Eduardo Sierra, climate expert with the Buenos Aires Grains Exchange. “This would contain the damage.”

If the storms fail to materialize, Argentine soy production prospects would decline sharply, Sierra said.

CBOT corn futures found underlying support from export demand for U.S. corn. The U.S. Department of Agriculture reported export inspections of U.S. corn in the latest week at 1.07 million tonnes, slightly above a range of trade expectations.

But pressure stemmed from news over the weekend that China launched an anti-dumping and anti-subsidy investigation into U.S. sorghum imports. The move came less than two weeks after U.S. President Donald Trump slapped steep tariffs on imports of solar panels and washing machines.

“Is this the beginning of a trade war? That has cast a pall over the market,” Fritz said.

— Julie Ingwersen is a commodities correspondent for Reuters in Chicago; additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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Coscia also was sentenced to two years of supervised release from jail, in a case that was closely watched by traders who want to avoid similar charges and market regulators.

Spoofing involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions.

Prosecutors had asked U.S. Judge Harry Leinenweber to lock up Coscia, owner of New Jersey-based Panther Energy Trading, for as long as seven years and three months after he was convicted last year of spoofing and commodities fraud.

Leinenweber told a packed courtroom in Chicago that Coscia’s typical earnings of about US$150,000 per month tripled while he was spoofing markets in 2011.

“It’s hard to see why he was doing that other than greed,” the judge said.

Coscia, who had denied wrongdoing during his trial, said in short prepared remarks at the sentencing: “I stand here convicted and shamed because of my actions.”

Stephen Senderowitz, one of Coscia’s attorneys, said he would appeal the conviction, partly because the government did not sufficiently show that other traders lost money as a result of Coscia’s actions.

The trader embraced more than a dozen family members and friends after the sentencing. He must report to prison by Sept. 30.

Prosecutors and regulators hope Coscia’s prison term will discourage other traders from trying to spoof markets. His prosecution was the first under an anti-spoofing provision of the 2010 Dodd-Frank financial reform.

Coscia was accused of using computer algorithms to quickly place large orders that he never intended to execute into markets run by CME Group and Intercontinental Exchange. The markets alleged to be involved included soybean meal and soybean oil as well as copper, gold and currencies.

“Initially, there was skepticism that the government could pull this off. I don’t think that skepticism is around anymore,” said Renato Mariotti, a former assistant U.S. attorney who prosecuted Coscia last year.

Mariotti, now a partner at the law firm Thompson Coburn, added that more spoofing indictments were likely soon.

Last year, the U.S. Justice Department and U.S. Commodity Futures Trading Commission also brought criminal and civil spoofing charges against Navinder Sarao, a London-based trader accused of market manipulation that contributed to the May 2010 “flash crash” in which the Dow Jones Industrial Average briefly plunged more than 1,000 points. Sarao has denied the allegations.

— Michael Hirtzer and Tom Polansek report on agriculture and ag commodity markets for Reuters from Chicago.

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Expanding inventories and concerns about sluggish demand also pushed front-month corn futures to their lowest price in more than six weeks.

The markets weakened after the U.S. Department of Agriculture projected U.S. corn supplies will rise to 12-year highs during the 2016-17 crop year as gains in production outstrip demand hikes.

U.S. soybean stocks are expected to fall slightly, but traders said large harvests in South America will keep world supplies large.

“Combined U.S. stocks of the major crops are growing at a time when global stocks are already considered burdensome,” JP Morgan analyst Ann Duignan said.

Nearby soybean futures slid four cents to $8.55 a bushel at the Chicago Board of Trade (all figures US$). The March contract traded as low as $8.54-1/2, the lowest price for a front-month contract since Dec. 17.

Nearby soybean meal ended down $2.80 at $257.20 per short ton, after trading to its lowest level since 2010.

Nearby corn futures dipped one cent to $3.54-1/2 a bushel, after trading to their lowest level since Jan. 12. And nearby wheat lost two cents to $4.43-1/4 a bushel, after trading near a 5-1/2-year low reached on Wednesday.

Sharp declines in wheat prices could prompt livestock producers to use cheap wheat as animal feed, instead of corn.

Supply concerns put broad pressure on the grains a day after the USDA predicted that U.S. farmers will increase corn plantings above analysts’ expectations.

Big ending stocks “are going to continue being an anchor on prices,” said Dax Wedemeyer, a broker and grains analyst for brokerage U.S. Commodities in Iowa.

“There are not any real weather issues to speak of in South America, or in the Midwest affecting wheat,” he said.

Consultancies Franca Junior and Agroconsult this week raised their estimates for Brazil’s 2015-16 soybean harvest in a sign losses from irregular rain in Mato Grosso last year were not as steep as originally thought.

Commodity funds sold an estimated net 5,000 corn contracts, and 4,000 contracts each of soybeans and wheat.

— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.

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Last week, the Supreme Court struck down a 2002 government regulation that allowed the import of genetically modified organisms (GMO) and imposed a temporary ban until new rules were formulated.

The order will halt the Southeast Asian country’s imports of soybean meal, which amount to around two million tonnes a year and mainly come from the U.S. Nearly all of the imports of the animal feed are genetically modified.

The Supreme Court’s decision to temporarily ban the “contained use, field testing, propagation and commercialization, and importation” of GMO came alongside a ruling to permanently halt the development of GMO eggplant following a case filed by a group led by the Philippine unit of Greenpeace Southeast Asia.

“What the Supreme Court is saying, I was informed, is to come up with new rules,” Philippine Agriculture Secretary Proceso Alcala said by telephone on Thursday.

“In the meantime, there will be a motion for reconsideration to be filed once we have received a copy of the decision.”

Such a request would mean there should be no ban while the new rules are being drafted, he added.

Markets have been sensitive to GMO issues in big Asian consumers. In November 2013, China began rejecting U.S. corn shipments saying they were tainted with a GMO Syngenta corn variety approved in the U.S., but not in China. Beijing has since eased the restrictions.

‘Food crisis’

The court ruling has also sparked alarm in the Philippine food industry.

“We may plunge into a food crisis if this is implemented,” said Ric Pinca, former vice-president of the Philippine Association of Feed Millers.

“You would not have pork, chicken, and fish available in the market.”

Banning GMO soymeal imports would mean that Philippine buyers need to buy non-GMO supply which would be easily US$80-$100 a tonne more expensive, said a Manila-based importer.

“Are we affluent enough as a country to afford that? And there is not a lot of non-GMO cargo available,” he said, adding that most soymeal available from the U.S. and Argentina, another major source for Manila, is genetically modified.

The Philippines gets nearly all of its soymeal needs from abroad, averaging two million to 2.2 million tonnes a year, importers say.

“It would directly affect my business because I have contracts in place that were bought and sold even before this came out,” the Manila-based importer said.

— Reporting for Reuters by Enrico Dela Cruz and Manolo Serapio Jr.

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