North American Grain and Oilseed Review: Trade war spillover brings down canola

By Glen Hallick, MarketsFarm

WINNIPEG, August 23 (MarketsFarm) – Intercontinental Exchange (ICE) Futures canola contracts were weaker on Friday, as prices were caught up in the spillover from the falling Chicago soy complex.

That was due to the United States/China trade war having heated up earlier today, when the latter announced it will slap tariffs of five to 10 per cent on US$75 billion of U.S. goods, including agricultural products. Soybeans are to be hit with a 10 per cent tariff, while wheat and other farm products will receive five.

Volumes were lower than the last few days, as more Prairie farmers have turned their attention to either getting ready for harvest or are in the field, rather than looking to sell their canola.

A weather premium has remained on canola prices, as the threat of frost increases as September approaches. Next week, Prairie night time temperatures will be in the single digits, particularly in the more northern growing regions.

The eastern Prairies have been forecast to get rain over the weekend, which could help with canola swathing. The western Prairies are expected to receive less rain.

There were 9,927 contracts traded on Friday, which compares with Thursday when 17,459 contracts changed hands. Spreading accounted for 4,147 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola Nov 449.90 dn 3.20
Jan 457.70 dn 3.40
Mar 464.90 dn 3.20
May 471.00 dn 2.80

SOYBEAN futures at the Chicago Board of Trade (CBOT) were weaker on Friday because the United States/China trade war heated up.

China announced on Friday that it will impose tariffs of five to 10 per cent on about US$75 billion of U.S. imports, including other agricultural products with soybeans at five per cent. The hikes will be in two stages, with the first on September 1 and the second on December 15, to match the U.S. hiking tariffs on US$300 billion of Chinese imports by 10 per cent on those same days.

U.S. President Donald Trump ordered U.S. companies to seek out alternatives to China, a move which further weighed on commodity and stock prices.

China has remained well behind in its U.S. soybean purchases, with only nine to 10 million tonnes shipped from a promise to buy 20 million tonnes.

The Pro Farmer Midwest Crop Tour wrapped up Thursday in Iowa and Minnesota. The average soybean pod count in Iowa was estimated to be 1,107 compared to 1,209 last year. In Minnesota, the count came in around 965 pods compared to 1,090 in 2018. The counts were made in three-by-three-foot squares in numerous fields in each state. There has been skepticism towards 2019’s counts as soybeans were planted late and pods were still forming.

Egypt’s tender for 30,000 tonnes of soyoil was unfulfilled and the country purchased 12,000 tonnes of sunflower oil from ADM.

CORN futures were lower on Friday on spillover from soybeans.

China said it will put a 10 per cent tariff on U.S. corn on December 15.

The Trump administration has continued to receive heavy criticism from U.S. farmers over its granting more than 30 waivers this week to big oil refineries from adding corn-based ethanol to the gasoline produced. Some ethanol refineries in the U.S. have now been shut down or production reduced by their owners. The administration’s move pushed corn prices down this week.

On the plus side, the Trump administration received support from the National Corn Growers Association for the Market Facilitation Program making another round of payments in 2019. However, the association pointed out corn growers were getting 14 cents per bushel compensation when the U.S./China trade war has cost them 40 cents per bushel.

The Pro Farmer tour pegged Iowa corn yields to be almost 183 bushels per acre (BPA), compared to 188 last year. In Minnesota, the tour estimated yields around 170 BPA versus 179 on the 2018 tour.

Taiwan’s MFIG purchased 65,000 tonnes of corn from Brazil. The tender originally included Brazil, Argentina, the U.S. and South Africa, and only Brazilian corn was offered.

China auctioned almost 481,800 tonnes of corn reserves, which was 27 per cent of the corn offered at the auction.

FranceAgriMer reported the French corn crop at 62 per cent good to excellent condition, for an increase of two points from the previous week.

WHEAT futures were mixed on Friday, with gains in Chicago, steady in Minneapolis and losses in Kansas City. Technical buying supported bids while the spring wheat harvest weighed on values.

China announced it will slap a 10 per cent tariff on U.S. wheat effective December 15.

The Buenos Aires Grain Exchange (BAGE) reported that Argentina’s wheat crop was 92 per cent good to excellent condition. However, a lack of rain and lower temperatures were affecting crops in the country’s central and southern regions.

The German wheat crop was estimated to be 23.1 million tonnes in 2019, up from last year’s 19.5 million, according to the country’s farmers’ association DBV. While Germany recovers from 2018’s drought, this year’s harvest was slated to fall short of the five-year average of 25.3 million tonnes.

International purchases included South Korean buying 30,000 tonnes of U.S. wheat, the Philippines acquiring 60,000 tonnes of feed wheat from the Black Sea region and Jordan having issued a tender to purchase 120,000 tonnes of milling wheat.

Futures Prices as of August 23, 2019

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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