North American Grain/Oilseed Review: Canola drops sharply lower

The ICE Futures canola market was weaker on Monday, reacting to losses in outside markets as activity resumed following the Canada Day long weekend.

Sharp losses in the Chicago soy complex on Friday accounted for much of the weakness in the canola market, as the Canadian oilseed repositioned itself relative to its United States counterpart. U.S. markets were closed Monday for Independence Day.

Losses in European rapeseed and Malaysian palm oil added to the bearish tone in canola, with chart-based selling a feature as speculators liquidate long positions and move to the short side of the canola market.

A lack of significant nearby weather worries across the Canadian Prairies contributed to the weakness in canola.

Statistics Canada releases updated acreage estimates on Tuesday, July 5, with pre-report positioning behind some of the activity. Opinions are divided on whether actual canola area will end up above or below the 20.9 million acres forecast in April. While strong prices likely encouraged some additional area, wet weather in the eastern Prairies may have limited how much went in the ground.

About 12,594 canola contracts traded on Monday, which compares with Thursday when 21,183 contracts changed hands. Spreading accounted for 6,712 of the contracts traded.

Agricultural futures markets in the United States were closed July 4 for Independence Day, but were down sharply on Friday, July 1, when Canadian markets were closed for Canada Day.

Speculators bailing out of long positions accounted for much of Friday’s selling pressure in SOYBEANS, with the smaller-than-expected acreage base reported by the U.S. Department of Agriculture on June 30 seemingly priced into the market for the time being.

Relatively favourable Midwestern crop conditions also weighed on the soy complex on Friday, with the forecasts remaining relatively benign after the weekend.

CORN lagged soybeans and wheat to the downside on Friday – but
was still lower.

Forecasts call for some timely rains across the Corn Belt over the next week, which should keep the grain under pressure.

Managed money fund traders were reducing their long positions in both corn and soybeans last week.

WHEAT was also caught up in Friday’s selling, with prices falling to their lowest levels in months.

Seasonal harvest pressure should continue to weigh on wheat going forward, as the U.S. winter wheat harvest progresses.

Reports of a large Russian crop are also overhanging the wheat market, although the ongoing war in Ukraine should be keeping some caution in the futures.

Tags: futures, Market, losses, corn, canola, wheat, rapeseed, palm oil