North American Grain/Oilseed Review: Canola drops to end crop year
WINNIPEG- The ICE Futures canola market fell sharply lower on the final trading day of the 2023/24 (Aug/Jul) marketing year, as speculative positioning weighed on values.
Sharp declines in the Chicago soy complex contributed to the bearish tone in canola, with European rapeseed and Malaysian palm oil futures also lower on the day. Strength in the Canadian dollar also weighed on values.
However, the underlying fundamentals remain supportive for canola, according to a trader, who noted that heat and dryness continues to stress crops in many areas.
A tentative agreement was reached over the weekend to end the strike at Canada’s West Coast ports, although industry participants have said disruptions to the grain movement could last for months.
About 24,553 canola contracts traded on Monday, which compares with Friday when 22,196 contracts changed hands. Spreading accounted for 12,548 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade were sharply lower on Monday, with forecasts calling for milder temperatures and sporadic showers across parts of the Midwest sparking the selloff. Chart-based speculative selling added to the declines as some stops were hit on the way down.
Rising production estimates out of South America were also bearish, with Safras and Mercado projecting Brazil’s 2024 crop at 171.5 million tonnes, which would be up by 6.5 million from the U.S. Department of Agriculture’s current forecast for the country.
The USDA announced private export sales of 132,000 tonnes of soybeans to China this morning, providing some support.
CORN was also pressured by the shifting U.S. weather forecasts, with technical selling adding to the declines as prices gapped lower on the charts.
However, while some dry areas are forecast to see rain over the next week, many parts of the Corn Belt may only receive spotty coverage.
Weekly U.S. corn export inspections of just over half a million tonnes were up on the week, but total exports to date of 34.8 million tonnes are still 33 per cent off the year ago pace.
WHEAT futures were down sharply across the board, with speculative selling a feature.
Russia’s SovEcon raised their production estimate for the current year to 87.1 million tonnes, from an earlier forecast of 86.8 million tonnes, citing better than expected yields.
The ongoing uncertainty over the conflict between Russia and Ukraine remains a feature in the background of the wheat market, although there were reports that Ukrainian grain was still finding its way out of the Black Sea.
