By Dave Sims, Commodity News Service Canada
Winnipeg, January 12 (CNS Canada) – The ICE Futures Canada canola complex finished the week on a higher note, propped up by a surprising USDA supply and demand report.
The agency pegged the 2017/18 U.S. soybean crop at 4.39 billion bushels. That was down 33 million bushels from the previous report. The news gave a slight boost to oilseeds on both sides of the border. However, the USDA also said that stockpiles of U.S. soybeans had risen by 56 per cent over the last report. That was enough to limit the upside.
Some investors took positions ahead of the weekend as U.S. markets are closed on Monday for Martin Luther King Jr. Day.
Strength in the Canadian dollar was bearish for canola as it made the commodity less attractive to international buyers.
Soil moisture conditions in Argentina and Brazil improved this week with scattered rains, which was bearish for futures.
A lack of snow cover in parts of Saskatchewan and Alberta has some farmers concerned as many areas are in near-drought scenarios.
Around 13,107 canola contracts were traded on Friday, which compares with Thursday when around 10,301 contracts changed hands. Spreading accounted for 8,240 of the contracts traded.
Settlement prices are in Canadian dollars per metric tonne.
Soybean futures on the Chicago Board of Trade ended 10 to 12 cents higher after today’s USDA supply and demand report contained a bullish surprise for investors.
For the most part, analysts thought the agency would hike its production forecast for 2017/18, but the USDA did the opposite, estimating the harvest at 4.39 billion bushels. That was significantly lower than the November forecast.
It also projected lower yields as well, reducing its forecast from 49.5 bushels to 49.1. On the other side of the coin, U.S. ending stocks were increased by 25 million bushels to 470 million. The agency blamed the rise on low US exports, increased global competition and a large crop in Brazil.
Corn futures finished two cents weaker due to pressure from the USDA report.
The agency pegged the 2017/18 U.S. harvest at 14.6 billion bushels, which was slightly higher than November’s forecast. Once again, this surprised some traders were thought the number would go down. Stockpiles of corn in the U.S. also came in higher at 2.48 billion bushels.
The Chicago wheat market ended 11 to 13 cents weaker on Friday, after the USDA said wheat supplies at the end of 2017/18 would hit 989 million tonnes. That compares to the previous estimate of 960 million tonnes.
A record harvest in Russia was another bearish factor as countries in the Middle East and North Africa turn to Russia for sales. US farmers are expected to plant just 32.6 million acres of winter wheat in 2018/19, that’s the lowest amount in over a century.
However, the agency pegged 2018/19 winter wheat planting in the U.S. at 32.6 million acres, which was the lowest amount in over 100 years. This lent some support to the futures.
Commodity Future Prices
updated 2018-01-12 13:19
Prices are in Canadian dollars per metric ton