North American grain/oilseed review: Canola corrects lower

By Phil Franz-Warkentin

Glacier FarmMedia MarketsFarm — The ICE Futures canola market was weaker on Tuesday, as traders took profits after recent gains.

The March contract held above its 200-day moving average, with the former resistance level now providing support at around C$640 per tonne.

Gains in Chicago soyoil and a steady tone in European rapeseed were supportive for canola, although soybeans and Malaysian palm oil were both softer on the day.

The speculative short position in canola dropped to its lowest level in two months in January, as fund traders covered short positions and put on new longs, according to the latest Commitments of Traders report from the United States Commodity Futures Trading Commission

While canola was due for a profit taking correction, solid export demand and tightening supply projections remained supportive. However, the threat of tariffs under the incoming Trump administration in the United States was also still overhanging the market.

There were an estimated 60,889 contracts traded on Tuesday, which compares with Monday when 67,767 contracts traded. Spreading accounted for 36,320 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were weaker on Tuesday, as the market was thought to be due for a correction after posting solid gains on the back of last week’s bullish production and stocks estimates from the United States Department of Agriculture.

The large Brazilian crop was overhanging the market, with harvest operations just getting started, according to reports out of the country. Conab pegged production at 166.3 million tonnes in a report out Tuesday. That compares with the USDA’s estimate of 169 million tonnes, while some private estimates have topped 170 million.

Dryness concerns in parts of Argentina remained supportive.

Good export demand was also underpinning the soy market, as the USDA reported flash sales of 198,000 tonnes of U.S. soybeans to China this morning.

Monthly U.S. crush data will be released Wednesday, with average trade expectations calling for a new record as U.S. capacity has expanded to meet the growing demand for biofuel production.

CORN futures were weaker after hitting their highest levels of the past year, as profit-taking came forward after prices hit their highest levels of the past year.

Conab lowered its call on Brazil’s corn production to 119.55 million tonnes, which compares with the USDA’s estimate of 127 million tonnes.

WHEAT was narrowly mixed, with losses in Minneapolis spring wheat and a steadier tone in the winter wheats.

Forecasts calling for cold temperatures across parts of the U.S. Plains were supportive, raising the possibility of winterkill. However, most of the wheat was thought to be under a good layer of snow.