North American grain/oilseed review: Canola boosted by easing tariff concerns

By Phil Franz-Warkentin

Glacier FarmMedia MarketsFarm — The ICE Futures canola market posted solid gains in most months on Tuesday, as a looming trade war with the United States was paused for at least a month.

U.S. tariffs and Canadian retaliatory measures had been set to come into effect on Feb. 4, which would have cut into U.S. demand for Canadian canola oil and meal. However, an agreement to pause the tariffs for 30 days was reached late-Monday.

Gains in Chicago soybeans also provided spillover support for canola. However, soyoil was sharply lower as the vegetable oil had found strength recently on expectations for increased demand if less Canadian canola oil was coming into the U.S.

Strength in the Canadian dollar, which was up by roughly half a cent relative to its U.S. counterpart, also tempered the gains in canola.

There were 57,073 contracts traded on Tuesday, which compares with Monday when 62,475 contracts changed hands. Spreading accounted for 29,820 of the contracts traded.

SOYBEAN futures at the Chicago Board of trade were stronger on Tuesday, as the pause on tariffs against Canada and Mexico provided support.

While additional 10 per cent tariffs on imports to the United States from China went into effect overnight, the announced retaliatory measures by China failed to include soybeans or corn.

Monthly U.S. crush data released after Monday’s close showed 217.7 million bushels of soybeans were crushed in the U.S. in December, which was in line with expectations and up 3.65 per cent from the previous month.

Soyoil stocks were down seven per cent on the year, at 1.696 billion pounds.

Opinions are divided on the size of Brazil’s soybean crop, as the harvest advances in the South American country with some forecasters lowering their calls and others raising projections.

CORN futures posted solid gains as trade worries eased for the time being.

About 473.2 million bushels of corn were used for ethanol production in the U.S. in December. That was up slightly on the month, but down 2.3 per cent from the same month a year ago.

The USDA announced private export sales of 132,000 tonnes of corn to South Korea this morning.

WHEAT was stronger across the board, with weakness in the U.S. dollar contributing to the gains as the softer currency makes exports more attractive for international buyers.

U.S. winter wheat condition ratings saw some improvement in Kansas over the past month, but Oklahoma, Colorado and Nebraska all saw a drop in the good to excellent ratings.