North American Grain/Oilseed Review: Canola climbs higher

By Phil Franz-Warkentin, MarketsFarm

WINNIPEG, Sep. 21 (MarketsFarm) – The ICE Futures canola market was stronger on Wednesday, moving back above the key C$800 per tonne level in the November contract on ideas values were underpriced compared to the product values.

Crush margins remain historically wide, which should be encouraging end-user demand as processing canola seed should be very profitable.

Gains in European rapeseed and Malaysian palm oil futures were also supportive, although losses in the Chicago soy complex tempered the upside.

Seasonal harvest pressure was another bearish influence. However, scattered showers and the risk of frost in some areas will likely cause some delays over the next week.

About 42,036 canola contracts traded on Wednesday, which compares with Tuesday when 53,617 contracts changed hands. Spreading accounted for 32,584 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were weaker on Wednesday, taking back some of their gains from earlier in the week. Seasonal harvest pressure was also starting to be felt in the bean market.

Improving crop prospects out of Brazil contributed to the losses in soybeans, with scattered rains across most soybean growing regions boosting production ideas for the upcoming crop. However, Argentina remains on the dry side.

CORN was also weaker, with declining demand from the ethanol sector behind some of the declines.

Daily ethanol production in the United States fell to its lowest rate in two years, according to the latest weekly report. At only 901,000 barrels per day, that was down six per cent compared to the previous week and off market expectations. Stocks of the renewable fuel dipped to 22.5 million barrels, from 22.8 the previous week.

The advancing U.S. corn harvest also weighed on prices.

WHEAT saw a continuation of Tuesday’s gains, with the largest advances in Chicago soft wheat.

Uncertainty over the ongoing conflict in Ukraine, heightened by the latest comments out of Russia calling for the mobilization of reserve troops and rumblings that Russia intends to annex occupied parts of Ukraine, kept wheat underpinned.

Winter wheat seedings in Ukraine are expected to be down significantly on the year, with Black Sea grain movement also up in the air.

The U.S. spring wheat harvest is nearly complete, while winter wheat planting is moving ahead. However, dryness in winter wheat areas may hurt germination.