North American grain/oilseed review: Canola drops late Wednesday
By Phil Franz-Warkentin
Glacier FarmMedia MarketsFarm — The ICE Futures canola market was weaker on Wednesday, retreating from earlier gains in the final hour of trade.
Canola had been trading within a few dollars of unchanged for most of the session before turning sharply lower in sympathy with Chicago soyoil. Traders were unsure what may have sparked the selloff.
The United States Department of Agriculture released interim guidelines on climate smart agricultural practices for growing crops for biofuel production, while monthly U.S. crush data was also released around the same time. However, neither report was bearish for oilseeds.
Uncertainty over possible U.S. tariffs did remain a bearish influence. The U.S. is the primary destination for Canadian canola oil exports, and the 25 per cent tariffs threatened by incoming U.S. President Donald Trump would seriously cut into that movement.
The March contract dropped below its 200-day moving average, likely encouraging additional speculative selling pressure. However, support held at the 50- and 100-day averages with canola settling well off its session lows.
A merger between Bunge Ltd. and Glencore-backed Viterra was cleared by the Canadian government on Tuesday. The Grain Growers of Canada released a statement saying it was “extremely disappointed” by the takeover, claiming it will cost farmers about C$770 million in annual sales.
There were an estimated 75,170 contracts traded on Wednesday, which compares with Tuesday when 60,889 contracts traded. Spreading accounted for 46,828 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade were weaker on Wednesday, pressured by the looming South American harvest. Chart-based profit-taking after hitting three-month highs on Tuesday contributed to the declines.
The losses came despite solid monthly crush data, with the National Oilseed Processors Association reporting a record 206.6 million bushels of soybeans crushed in the United States in December. That topped average trade guesses, with soyoil supplies as of Dec. 31 up 14 per cent on the month at 1.236 billion pounds.
CORN futures were higher, underpinned by dryness concerns in Argentina.
Weekly U.S. ethanol production of 1.095 million barrels per day was down slightly, although stocks of the renewable fuel were up by 860,000 barrels to come in at just over 25 million barrels.
WHEAT was narrowly mixed, although the bias was lower in most contracts.
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.
