North American grain/oilseed review: Canola follows soyoil higher

By Phil Franz-Warkentin

Glacier FarmMedia MarketsFarm – The ICE Futures canola market was stronger on Monday, taking some direction from gains in Chicago soyoil.

European rapeseed and Malaysian palm oil futures were also stronger.

Chart-based speculative short-covering was a feature, with prices testing some key chart levels. The weekly Commitments of Traders report showed managed money traders had cut their net short position in canola to its smallest level since October as of May 7.

However, recent rains across Western Canada helped improve moisture conditions in many areas, tempering the upside in canola.

There were an estimated 49,666 contracts traded on Monday, which compares with Friday when 50,000 contracts traded. Spreading accounted for 22,002 of the contracts traded.

All three WHEAT futures markets in the United States climbed higher on Monday, with weather concerns in Russia providing the catalyst for the rally.

Recent frosts in Russia hurt the country’s winter wheat crop, with traders still trying to get a handle on the extent of the damage. Dryness in wheat growing regions was also cutting into yield estimates, although there are some rains in the forecasts now.

Russian consultancy IKAR cut their call on this year’s wheat crop by five million tonnes from an earlier estimate, now at 86 million tonnes. That compares with the U.S. Department of Agriculture’s forecast of 88 million tonnes.

The smaller crop should cut into export movement, although the country is still expected to be a major player in the global market.

Weekly U.S. export inspections data showed 366,000 tonnes of U.S. wheat shipped during the past week, which was up by eight per cent from the previous week.

SOYBEAN futures at the Chicago Board of Trade were stronger. Talk the U.S. may be looking to increase tariffs on some Chinese imports, including cooking oil used for producing biodiesel, lent strength to soyoil which spilled into the bean market.

Ongoing concerns over flooding in Brazil were also supportive.

Weekly U.S. soybean exports came in at 406,000 tonnes, which was roughly double what moved during the same week a year ago. However, year-to-date soybean exports of about 39.5 million tonnes were still running 17.7 per cent off last year’s pace.

CORN was higher, recovering from earlier losses by the close as the rally in wheat was supportive.

Weekly U.S. corn export inspections of 938,000 tonnes marked the first time shipments dipped below a million tonnes in 13 weeks.

U.S. weather conditions look reasonably favourable for spring seeding over the next week.