North American Grain/Oilseed Review: Canola climbs higher to start week

The ICE Futures canola market was stronger on Monday, hitting fresh contract highs in some months as a rally in Chicago Board of Trade soyoil provided spillover support.

The ongoing conflict in Ukraine kept some uncertainty in the agricultural markets, with strength in crude oil on Monday lending support to vegetable oil markets. However, soybeans held closer to unchanged on the day.

A weaker tone in the Canadian dollar along with ongoing concerns over tight old crop canola supplies also underpinned the futures.

Ideas that the market was looking overbought at current levels tempered the upside, with thin volumes exaggerating the price moves.

About 13,641 canola contracts traded on Monday, which compares with Friday when 23,034 contracts changed hands. Spreading accounted for 3,804 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were narrowly mixed at Monday’s close, seeing some consolidation as gains in soyoil were countered by losses in soymeal.

Solid export demand provided some underlying support, with flash sales of 132,000 tonnes of soybeans to China reported by the United States Department of Agriculture.

Brazil’s AgRural released updated production estimates, pegging the country’s soybean crop at only 122.8 million tonnes. That’s about nine million tonnes below the USDA’s current forecast. Harvest operations are thought to be about half done in the country.

The USDA’s monthly supply/demand report will be out on March 9, with pre-report positioning behind some of the activity. General expectations are for a cut to U.S. ending stocks.

CORN was also narrowly mixed at the close, with small losses in the front months and a firmer tone in the more deferred positions.

An overnight rally in crude oil spilled over to provide some support for the ethanol-linked grain. However, oil moved off its highs.

U.S. corn ending stocks are generally expected to be revised lower in Wednesday’s report, as the conflict in Ukraine should lead to an increase in U.S. exports. South American production cuts are also likely.

WHEAT was higher, with the May Chicago contract up its expanded limit once again while the other wheat markets lagged to the upside.

Ukraine and Russia account for a large portion of the world wheat export market, with the continued conflict causing other nearby countries to also shut down exports.

That should shift more demand to North America. However, a big Australian crop will take up some of the slack. Australia’s agriculture bureau ABARES raised their estimate on the size of the crop to a record 36.3 million tonnes.

The Western Producer

Tags: soybeans, soyoil, wheat futures, canola market, soybean futures, corn futures, Vegetable Oil