North American Grain/Oilseed Review: Weak Canadian dollar boosts canola

By Phil Franz-Warkentin, Commodity News Service Canada

Winnipeg, Dec. 5 (CNS Canada) – ICE Futures canola contracts were stronger on Wednesday, as weakness in the Canadian dollar provided support.

The Bank of Canada kept its key overnight interest rate unchanged at 1.75 per cent on Wednesday while lowering its expectations for future rate hikes in the accompanying statement. The Canadian dollar lost two-thirds of a cent relative to its United States counterpart as a result and hit its weakest levels in 18 months, which was supportive for canola crush margins.

However, uncertainty in the U.S. soybean market kept some caution in canola, with market participants still waiting for any concrete export news to come from the tentative trade truce between the U.S. and China.

Statistics Canada releases its updated production estimates on Thursday, and positioning ahead of that report was another feature.

About 27,704 canola contracts traded, which compares with Tuesday when 37,334 contracts changed hands. Spreading accounted for 20,846 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade held onto small gains on Wednesday, although activity was choppy.

While the latest trade developments between the United States and China brought some optimism back to the soy market, there have still been no actual reports of fresh U.S. soybean sales.
Expectations for large South American crops also weighed on prices.

Brazil’s soybean crop is estimated at anywhere from 123 million to 130 million tonnes by consultancy agency Celeres. That would be a new record, and well above the U.S. Department of Agriculture’s current estimate of 120.5 million.

The USDA releases its own updated world supply/demand estimates on Dec. 11, and pre-report positioning was a factor.

U.S. equity markets were closed Wednesday for a day of mourning for former President George H.W. Bush, limiting the activity in the commodity markets to some extent.

CORN futures were steady to slightly lower, lacking any clear direction. While the firm tone in soybeans provided some spillover support, losses in wheat weighed on corn and helped keep the grain trading in a narrow range.

Brazil’s corn crop is also expected to be larger on the year, with exports out of the country already running well ahead of the previous year.

WHEAT futures were lower on Wednesday, as prices continued to back away from their recent gains.

While U.S. wheat is thought to be looking more competitively priced on the world market, the country continues to miss out on export business.

In addition, a recent sale to Egypt was facing some questions, as Egypt has not issued letters of credit for a number of cargoes – effectively delaying payment.

Futures Prices as of December 5, 2018

2018-12-05 13:19
Price Change
Jan 484.70 2.30
Mar 492.00 2.00
May 499.50 1.80
Jul 506.00 1.90
Milling Wheat
1970-01-01 00:00
Price Change
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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