North American Grain and Oilseed Review: Canola reaches new contract highs

By Glen Hallick, MarketsFarm

WINNIPEG, Dec 3 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts were stronger on Thursday, hitting new contract highs following the release of the Statistics Canada report on principal field crops.

The federal agency dropped its estimate for canola production in 2020/21 from 19.4 million tonnes to 18.7 million. Dry conditions across the Prairies prior to harvest eroded potentially high yields.

With the canola crush and exports at a brisk pace, there is the real threat of running out of canola before the next marketing year. Price rationing has already started to some extent, according to a trader.

Gains in Chicago soyoil and European rapeseed added to the rise in canola, while lower Malaysian palm oil values tried to temper those increases.

A stronger Canadian dollar attempted to do the same thing with little success. The loonie was at 77.75 U.S. cents, compared to Wednesday’s close of 77.32.

There were 45,554 contracts traded on Thursday, which compares with Wednesday when 31,508 contracts changed hands. Spreading accounted for 35,678 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Jan 589.10 up 9.50
Mar 583.70 up 7.60
May 578.50 up 5.80
Jul 571.50 up 4.10

SOYBEAN futures at the Chicago Board of Trade (CBOT) were stronger on Thursday, due to positioning ahead of next week’s supply and demand estimates.

The United States Department of Agriculture (USDA) is scheduled to release its next World Agricultural Supply and Demand Estimates (WASDE) on Dec. 10. In positioning ahead of the report some in the trade are expecting increases in usage and exports along with decreases in ending stocks.

In the weekly export sales report from the USDA, soybean sales fell to a marketing year low of 406,900 tonnes for the week ended Nov. 26. The amount was also at the low end of market expectations. Soymeal export sales were 163,800 tonnes and those for soyoil were 2,500 tonnes.

Significant rain has been forecast for central and northwestern Brazil. Meanwhile the southern region of Brazil, along with Cordoba and Northern Santa Fe in Argentina, are likely to remain drier for the next few days before getting rain.

At 1.47 million tonnes Brazil soybean exports in November fell 71 per cent from the previous November.

China has approximately 9.94 million tonnes of soybeans in unshipped sales, according to the USDA. However, U.S. soybean exports to China are a record 19.7 million tonnes at this point into the 2020/21 marketing year.

Vietnam issued a tender for 68,000 tonnes of soymeal.

CORN futures were higher on Thursday, gleaning some spillover from soybeans.

Increases in crude oil prices were supportive of corn as West Texas Intermediate was approaching US$46 per barrel.
Corn export sales of more than 1.37 million tonnes dropped 18 per cent from the previous week and were towards the high end of trade projections.

A report stated the 2020/21 Brazil corn crop was projected to come in between 104 million to 109 million tonnes. The forecast was based on increased acres planted and improvements in the weather.

China instituted new rules regarding corn stockpiles, with national government oversight extended to local government stockpiles. This includes setting storage volumes, the timing of sales, plus determining storage and purchasing recommendations for individuals.

South Korea purchased 68,000 tonnes of U.S. corn.

WHEAT futures were lower on Thursday, on weak export sales.

At 446,400 tonnes, wheat export sales dropped 44 per cent from the previous week, but were within market expectations.

The U.S. Dollar Index tempered the declines in wheat as the greenback slipped to 90.690 points, making U.S. wheat more competitive on the global market.

Ukraine kept its winter wheat crop estimate at 26.7 million tonnes as planting was almost complete.

Futures Prices as of December 3, 2020

Canola
Price Change
Milling Wheat
1970-01-01 00:00
Price Change
Durum
1970-01-01 00:00
Price Change
New Barley
1970-01-01 00:00
Price Change

Prices are in Canadian dollars per metric ton

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