Winnipeg – ICE Futures Canada canola contracts held within a rather narrow range during the week ended June 29, with only the nearby July contract seeing some wide price swings as traders exited the front month before its expiry.
Aside from the month-end spread trade, positioning ahead of a number of key reports kept activity on the choppy side.
Statistics Canada raised its forecast for this year’s canola seeded area to 22.7 million acres, which was well above the 21.383 million forecasted prior to seeding and only slightly below the record 23.0 million planted in 2017. Canola acres were right in line with trade expectations, but the official confirmation of the large acreage base should at least limit the upside for prices going forward.
Soybean seedings in the United States were also up from earlier projections in a separate report from the U.S. Department of Agriculture. At 89.5 million acres, the U.S. bean crop would still be about 600,000 acres below the 2017 area, but marks the first time in 35 years that U.S. farmers planted more soybeans than corn. Corn area in the country was pegged at 89.1 million acres by the USDA, which would be down by about a million acres on the year.
After going heavy into soybeans last year, Canadian farmers are taking a bit of a step back from the crop in 2018. Total seeded Canadian soybean area was estimated at 6.3 million acres by StatsCan, which compares with 7.3 million in 2017. Saskatchewan area was cut in half from the 850,000 acres seeded in 2017.
North American spring wheat area will be up on the year, with Canadian farmers planting 1.5 million acres more non-durum spring wheat in 2018 and U.S. farmers seeding a whopping 2.2 million more acres to the crop. The large spring wheat crops, and improving moisture conditions in the key North American growing regions, had the Minneapolis futures losing ground to the Chicago and Kansas City winter wheats during the week.
With the acreage reports now in the rearview mirror, attention in the grains and oilseeds should now return to summer weather and global trade. While there are areas of concern, with dryness in some areas and excessive moisture in others, North American crops are generally thought to be in good shape for the time being.
What’s not in good shape is international trade. After months of talk, July will see a number of back-and-forth tariffs go into effect, with the resulting adjustments to the flow of agricultural goods still facing some question marks. As an example, Canadian canola could see some more Chinese demand if that country stops buying U.S. soybeans. However, those soybeans will end up somewhere else, leading to other adjustments in the world supply/demand tables.