North American Grain/Oilseed Review: Canola tests highs

The ICE Futures canola market was stronger on Tuesday, testing contract highs in sympathy with the Chicago Board of Trade soy complex.

Forecasts calling for hot and dry weather in South America accounted for some of the buying in soybeans and soyoil that spilled into canola, as soybean yields in Brazil and Argentina could be hurt by the adverse growing conditions.

Strength in Malaysian palm oil and European rapeseed futures added to the firmer tone, with both of those markets hitting fresh highs of their own.

Bullish technical signals were also supportive. However, ideas that the canola market was looking overpriced at current levels tempered the gains somewhat.

About 18,802 canola contracts traded on Tuesday, which compares with Friday when 8,089 contracts changed hands. Spreading accounted for 10,326 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade posted double-digit gains on Monday, nearing their highest levels in six months.

Forecasts calling for hot and dry conditions in both Brazil and Argentina over the next week provided the catalyst for the gains in soybeans, with chart-based buying adding to the upside.

However, soft exports out of the United States during the holidays put some pressure on values, with the 1.2 million tonnes moved during the week ended Dec. 30 down 32 per cent from the previous week.

Monthly crush data showed that 190.5 million bushels of soybeans were processed in the U.S. in November, coming in well below trade expectations closer to 197 million.

CORN was also supported by the South American weather worries, with chart-based buying adding to the advances as prices climbed above the psychological US$6.00 per bushel mark in both the March and May contracts.

Solid demand from the ethanol sector contributed to the gains, with 468.7 million bushels of corn used to create the renewable fuel in November. That was the highest for the month in four years, and well above trade guesses.

WHEAT was steady to higher, with solid gains in the winter wheats and a more subdued tone in Minneapolis spring wheat.

Crop conditions in the key winter wheat growing states of Kansas and Oklahoma deteriorated over the past month. Kansas was only 33 per cent good to excellent in the latest report, while Oklahoma was at 20 per cent.

The Western Producer

Tags: futures, corn, canola, soybeans, wheat, soyoil, rapeseed, palm oil