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Canola futures hold steady

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Published: February 26, 2020

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WINNIPEG,  (MarketsFarm) – The ICE Futures canola market held onto small gains on Wednesday after trading to both sides of unchanged, seeing some consolidation after hitting contract lows on Tuesday.

Canola was thought to be looking oversold and due for a correction from a chart-standpoint, which accounted for some early speculative buying interest. End user bargain hunting was another minor feature.

Gains in Chicago Board of Trade soybeans and a softer tone in the Canadian dollar also provided some support.

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Canola futures hold steady

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However, CBOT soyoil remained under pressure and canola crush margins have deteriorated over the past month. Ongoing concerns over the COVID-19 coronavirus outbreak and uncertainty over Canadian anti-pipeline blockades also kept some caution in the market, according to participants.

About 34,689 canola contracts traded on Wednesday, which compares with Tuesday when 38,468 contracts changed hands. Spreading accounted for 24,062 of the contracts traded.

SOYBEAN futures at the Chicago Board of trade posted small gains on Wednesday as the market continued to correct after dropping sharply on Monday.

News that Argentina was suspending export registrations on agricultural goods ‘until further notice’ accounted for some of the strength in soybeans. The suspension is thought to be a precursor to the South American country implementing increased tariffs on soybean exports in an effort to deal with an economic crisis.

Increased export tariffs out of Argentina would likely shift some demand back to the United States, with soymeal seeing much of the strength in the futures on Wednesday as Argentina is a major soymeal seller.

However, soyoil remained under pressure, with global coronavirus worries keeping the vegetable oil markets pointed lower.

The advancing Brazilian harvest also weighed on prices.CORN futures were lower on the day. While Argentina may be increasing export tariffs on soybeans, market participants expect corn taxes may be going down. That would boost exports out of the country and cut into some U.S. demand.

WHEAT futures were narrowly mixed, with the broad worldwide concerns over the COVID-19 coronavirus keeping a cautious tone in the wheat market.

Increased export competition out of Ukraine weighed on values, with wheat exports out of the country of 16.5 million tonnes during the crop year to date up by roughly a million tonnes from the same time a year ago.

About the author

Phil Franz-Warkentin

Phil Franz-Warkentin

Editor - Daily News

Phil Franz-Warkentin grew up on an acreage in southern Manitoba and has reported on agriculture for over 20 years. Based in Winnipeg, his writing has appeared in publications across Canada and internationally. Phil is a trusted voice on the Prairie radio waves providing daily futures market updates. In his spare time, Phil enjoys playing music and making art.

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