North American grain/oilseed review: Canola climbs on U.S. biofuel optimism

By Phil Franz-Warkentin

Glacier FarmMedia | MarketsFarm — The ICE Futures canola market climbed to fresh contract highs on Tuesday, underpinned by optimism over proposed changes to biofuel policies in the United States.

The amendments to U.S. biofuel policies proposed by the House Ways and Means Committee would see the 45Z biofuel tax credit extended through 2031, while limiting feedstocks to those sourced from the U.S., Canada and Mexico. Canola-based fuels — currently deemed as too carbon-intensive for the credit — could also qualify once again. Soyoil climbed higher on the news, which contributed to the strength in canola.

Tight supplies and the need to ration demand contributed to the gains. The technical charts also remain pointed higher, with the break above C$720 per tonne in the July contract bringing in additional buying interest.

There were 64,575 contracts traded on Monday, which compares with Monday when 67,856 contracts changed hands. Spreading accounted for 30,512 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were stronger on Tuesday, as a rally in soyoil provided support.

Soyoil strengthened on the back of proposed amendments to U.S. biofuel policies that would see the 45Z clean fuel production biofuel tax credit extended through 2031, while limiting feedstocks to those sourced from the U.S., Canada and Mexico. That would effectively shut the door to used cooking oil imports from China or other feedstocks from South America.

However, good seeding weather tempered the gains in beans. U.S. soybean crop was 48 per cent planted as of May 11, which was 11 points ahead of average for this time of year. Emergence was also ahead of normal, at 17 per cent.

CORN was pressured lower by the rapid U.S. seeding pace.

Corn planting in the U.S. hit 62 per cent complete in the latest weekly report, which beat trade expectations and compares with the five-year average of 56 per cent done. Corn was 28 per cent emerged — seven points ahead of average.

WHEAT futures were mixed, with gains in the winter wheats and a softer tone in spring wheat.

The U.S. winter wheat crop improved to 54 per cent good-to-excellent from 51 per cent the previous week. The crop was 53 per cent headed, which compares with the average 45 per cent.

Spring wheat was 66 per cent planted, which was well ahead of the average of 49 per cent.