North American Grain/Oilseed Review: Canola rallies with soy complex

The ICE Futures canola market was stronger on Tuesday, as a rally in the Chicago soy complex provided spillover support.

Speculative buying was a feature, as sharp gains in crude oil and outside financial markets was seen as a sign of increasing risk appetite.

Canada’s tight supply situation remained another supportive influence, although demand is being rationed at current price levels with some ideas that the market may be looking overpriced.

The Canadian dollar was stronger, putting some pressure on canola. Pre-holiday positioning was a feature, as participants move to the sidelines ahead of the Christmas and New Year’s holidays.

About 16,518 canola contracts traded on Tuesday, which compares with Tuesday when 17,688 contracts changed hands. Spreading accounted for 7,782 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were stronger on Tuesday, as advances in the global energy and equity markets spilled into the grains and oilseeds.

Forecasts calling for hot and dry weather in South America added to the strength in beans, as the adverse growing conditions could cut into the production prospects in the continent.

Chart-based buying was also supportive, with the move back above US$13 per bushel in the January contract bullish from a technical standpoint.

However, activity is expected to turn thin and choppy over the next few days as participants square positions and move to the sidelines ahead of the holidays.

CORN futures found some spillover support from the advances in soybeans, recovering from recent losses.

The United States Grains Council released their harvest quality report, pegging test weights in 2021 at 58.3 pounds per bushel on average. That would be down slightly from the 58.7 reported last year, but still above the five-year average.

Ukraine’s corn crop was estimated 39.82 million tonnes by the country’s ag ministry, which would be a new record.

WHEAT was higher, with the largest gains in the winter wheats, as the spreads between the three markets saw some adjustment.

SovEcon raised their forecast for 2022 wheat production in Russia to 81.3 million tonnes, which would be up by 600,000 tonnes from an earlier estimate.

The Western Producer

Tags: price, soybean futures, corn futures, canola market, demand, wheat futures