Quiet market waiting on trade talks, USDA reports

WINNIPEG – ICE canola futures is quiet at the end of January, but could see some movement from outside influences in the coming weeks, according to Exceed Grain Senior Marketing Analyst Wayne Palmer.

“Everybody is waiting to see what’s going to happen with the Chinese/United States (trade) talks,” Palmer said.

Two days of high level trade negotiations between the world’s two largest economies got underway in Washington, D.C. on Jan. 30. Hopes are for a deal to either end the trade war between the U.S. and China or at least find a solution to work towards, according to media reports.

Added to that has been the lack of reports from the U.S. Department of Agriculture (USDA) because of the 35-day partial shutdown of the U.S. government, which ended Jan. 25. The USDA is set to release its backlog of reports on Feb. 8, which will show the true picture of commodity sales to China. During the shutdown, traders and analysts put forth their best guesses as to how much grain was exported to China.

“Everybody is getting impatient because we need some confirmation of Chinese sales,” Palmer commented.

As for the farmers, Palmer said they are cash adequate and waiting for canola to hit C$11 per bushel, which some locations are offering.

“But that’s late delivery, probably May, June and July. Farmers rather, if they could, get C$11 per bushel for a March or April position,” he commented.

Although cash adequate, farmers are still holding large supplies of unpriced canola, Palmer said.

“If the prices do not rally, (the farmer is) going to take this market down, because he’s got to sell it. Because sooner or later he’s going to look at planting and he’s going to have another crop to sell,” the analyst explained.

Any rallies pertaining to canola have only occurred, “because funds are short canola,” he said, noting the red line-blue line chart signals showing technicals should be bought.

Soyoil has been riding a 12 to 13-week high and was up another 30 points on Wednesday.

“With soyoil as strong as it is, you will have crusher buying in here, and that’s predicated pretty well on soybeans rallying. They go underneath support because of that dryness in Brazil,” he commented.

With the soybean harvest is underway in Brazil; rain has been forecast during the next seven to 10 days, which has been dealing with dryness. In turn, that dryness already forced predications of the size of Brazil’s soybean crop to be revised downward, Palmer said.

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