North American grain/oilseed review: Canola ends higher amid tariff threats

By Phil Franz-Warkentin

Glacier FarmMedia MarketsFarm — The ICE Futures canola market was stronger on Monday, recovering from earlier losses as uncertainty over incoming United States tariffs kept global markets on edge.

U.S. tariffs on Canadian imports set to come into effect on Tuesday would likely alter the flow of Canadian canola oil and meal. Canada has also announced its own retaliatory tariffs against the U.S.

However, news Monday morning that Mexico was granted a month-long reprieve on tariffs brought some optimism into the canola market. Prime Minister Justin Trudeau is expected to speak with U.S. President Donald Trump later this afternoon. The two leaders already spoke once this morning.

The Chicago soy complex, European rapeseed and Malaysian palm futures were all stronger. Weakness in the Canadian dollar, tightening supply projections and the need to ration demand also underpinned the canola market.

There were 62,475 contracts traded on Monday, which compares with Friday when 102,000 contracts changed hands. Spreading accounted for 35,950 of the contracts traded.

CORN futures at the Chicago Board of trade were stronger on Monday, recovering from earlier losses as a pause on U.S. tariffs on imports from Mexico provided support. Mexico is the largest importer of U.S. corn and has now promised to place more troops along the border to slow drug trafficking — Donald Trump’s stated reason for imposing tariffs.

The U.S. exported 1.25 million tonnes of corn in the past week, according to weekly export inspections data, with Mexico the largest destination.

Trump signed an order placing additional 10 per cent tariffs on China starting Tuesday, but Chinese markets remain closed today for the Lunar New Year holiday.

SOYBEANS had moved lower overnight but also found some support on the back of the Mexican optimism.

Solid weekly export movement added to the gains, with just over a million tonnes of U.S. beans inspected for export in the past week.

The Brazilian soybean harvest was nine per cent done in the latest report out of the country, running well off last year’s pace.

WHEAT was stronger across the board, also reacting to the shifting trade news.

While the easing tensions with Mexico were somewhat supportive, the U.S. imports a fair amount of Canadian wheat and threats of disruptions to that trade flow was still overhanging the market.

Weekly US wheat export inspections were pegged at around 252,000 tonnes. While that was down on the week, year-to-date wheat exports of 14 million tonnes were running 21 per cent ahead of last year’s pace.