North American grain/oilseed review: Canola falls with soy complex

By Phil Franz-Warkentin

Glacier FarmMedia MarketsFarm — The ICE Futures canola market fell below nearby chart support on Tuesday as losses in Chicago soybeans and soyoil spilled over to weigh on prices.

Bearish technical signals contributed to the declines, although the underlying fundamentals remained supportive.

Canola remains cheap compared to most other oilseeds, with expectations for tightening supplies keeping both exporters and domestic crushers in the market on a scale-down basis.

Weakness in the Canadian dollar was also supportive, with the currency trading below 70 U.S. cents for the first time since the beginning of the COVID-19 pandemic in 2020.

There were an estimated 60,272 contracts traded on Tuesday, which compares with Monday when 69,425 contracts traded. Spreading accounted for 38,042 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade dropped to fresh contract lows on Tuesday, with favourable South American production prospects behind some of the weakness.

In addition to the large Brazilian crop expectations, weakness in the Brazilian real relative to the United States dollar was encouraging more exports from the country.

Bearish chart signals contributed to the losses, with stops hit on the way down.

The U.S. Department of Agriculture reported flash sales of 187,000 tonnes of soybeans to Spain and an additional 132,000 tonnes to unknown destinations.

CORN futures were also pressured by large South American crop projections, with spillover selling from the drop in soybeans contributing to the losses.

The USDA reported flash sales of 170,000 tonnes of corn to Mexico this morning, providing some support.

An upcoming U.S. funding bill is expected to include a plan that would allow for the year-round selling of gasoline with a higher level of ethanol blended in. Currently sales of E15 gasoline with 15 per cent ethanol content are restricted during the summer months.

WHEAT was down across the board despite declining production estimates out of Russia.

Citing poor weather, SovEcon cut their call on Russia’s 2025 wheat crop by three million tonnes from an earlier estimate — now at 78.7 million tonnes.

While the smaller Russian crop was supportive, improved prospects out of the southern hemisphere — especially Australia and Argentina — weighed on the futures.

The broad strength in the U.S. dollar internationally was also bearish, making U.S. wheat more expensive for global buyers.