North American Grain and Oilseed Review: War pushes canola, comparable oils higher

Intercontinental Exchange (ICE) canola futures saw a second day of sharp upswings on Tuesday, especially in the old crop months.

Strong upticks in the Chicago soy complex, Malaysian palm oil and European rapeseed spilled over into canola. However, a trader said these increases are very likely to “violently crash” before this week is out. He said there’s the high emotions over Russia’s invasion of Ukraine plus large influxes of money into the markets combined to create a very thin rationale for the increases.

Another day of hikes in global crude oil prices was fueling gains in edible oils.

The Canadian dollar was lower at mid-afternoon, with the loonie at 78.49 U.S. cents, compared to Tuesday’s close of 78.75.

There were 29,608 contracts traded on Tuesday, which compares with Monday when 24,943 contracts changed hands. Spreading accounted for 9,640 contracts traded.

Settlement prices are in Canadian dollars per metric tonne.

Price Change
Canola May 1,079.90 up 47.20
Jul 1,049.60 up 39.80
Nov 891.20 up 14.80
Jan 891.30 up 14.10

SOYBEAN futures at the Chicago Board of Trade (CBOT) surged higher on Tuesday, due to market concerns over the Russia-Ukraine War.

The United States Department of Agriculture announced a private sale of 264,000 tonnes of soybeans to China. Delivery is to be during the 2022/23 marketing year.

The USDA monthly fats and oils report cited 194 million bushels of soybeans were processed in January, coming within trade expectations. However the crush was four million bushels less than in January 2021. Crude soyoil production came to 2.28 billion pounds, down slightly from a year ago.

The department also issued its annual fats and oils report, which stated 64.2 million tons of soybeans were crushed in 2021, down three per cent from 2020. Crude soyoil production totaled 25.2 billion pounds, slipping one per cent from the previous year.

The USDA attaché in Argentina chopped four million tonnes from that country’s soybean harvest, now expected to be 41 million tonnes.

Reports placed the Brazil soybean harvest at 42 per cent complete, for a gain of nine points on the week. Above average rainfall is in the forecast in the coming weeks for Argentina and Brazil.

CORN futures vaulted on Tuesday, with a limit up increase in the nearby May contract.

The USDA released its monthly grain crushings report, which showed 527 million bushels of corn were used in January 2022. That was up 13 per cent from a year ago. The annual report said 5.28 billion bushels of corn were processed in 2021, for an increase of seven per cent from 2020.

The planting of Brazil’s second corn crop was said to be 10 points ahead of the average pace.

Due to the war, Ukraine is said to be unable to export nearly 14 million tonnes of corn, of which about half has been sold to China. Also, there have been growing doubts if the 2022 corn crop can be planted.

Matif corn futures hit all-time highs due to a lack of exports out of the Black Sea.

WHEAT futures were also limit up on Tuesday in a number of Kansas City and Chicago contracts.

Winter wheat conditions in Kansas dipped one point on the week at 25 per cent good to excellent. Oklahoma is up two points at 11 per cent good to excellent.

Egypt cancelled a second tender due to a lack offers. As the world’s largest importer of wheat, Egypt purchases large amounts from the Black Sea region, especially Russia.

Australia said its 2021/22 wheat harvest is up five per cent at a record 36.3 million tonnes. Better than expected yields were found after November rains threaten the crop’s quality.

The Western Producer

Tags: prices, soybean futures, corn futures, rapeseed, palm oil, canola futures, wheat futures