By Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, April 4 (CNS Canada) – ICE Futures Canada canola contracts were stronger on Wednesday, as an escalating trade dispute between China and the United States could open the door for more Canadian business.
Responding to U.S. threats, China announced proposed tariffs of its own on a wide range of U.S. imports overnight – including soybeans. While the resulting selloff in Chicago Board of Trade soybeans initially spilled into the canola market, the Canadian oilseed managed to turn higher amid ideas that the spat could create export opportunities elsewhere.
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China is already thought to be looking for alternatives to U.S. soybeans, with canola basis levels in Vancouver reportedly rising to C$60 above the futures from C$40 on Tuesday.
However, large old crop supplies and expectations for increased acres this spring did put some pressure on values. The Canadian dollar was also a bit firmer on the day.
About 39,372 canola contracts traded on Wednesday, which compares with Tuesday when 20,904 contracts changed hands. Spreading accounted for 24,958 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade were down sharply on Wednesday, as the markets reacted to proposed Chinese retaliatory tariffs on US$50 billion worth of U.S. goods.
While the tariffs are not yet in place, the threat was enough to spark the heavy losses in soybeans seen today, with some stops likely hit on the way down.
However, soybeans did manage to settle well off of their session lows, as the market uncovered some support.
Declining production estimates out of Argentina and the smaller-than-expected soybean acres in last week’s USDA prospective plantings report also remained supportive.
CORN futures were also pressured lower by the trade dispute, as China is a major buyer of U.S. corn.
Beyond the trade issues, seeding is in its early stages in the southern U.S., while cooler weather to the north may delay some corn planting.
WHEAT futures ended mixed, with small gains in Kansas City hard red winter wheat and losses in the other markets.
Spillover from the declines in corn and soybeans accounted for some of the selling pressure, as wheat also reacted to the Chinese trade war.
However, concerns over cooler-than-normal temperatures across a large portion of the U.S. winter wheat region provided underlying support, especially as conditions are already poor in many areas.
