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

WINNIPEG, Feb. 2 (MarketsFarm) – The ICE Futures canola market was weaker on Tuesday, with the largest losses in the nearby March contract as the intermonth spreads saw some readjustment after Monday’s rally.

Losses in Chicago Board of Trade soybeans and soyoil put some spillover pressure on canola, with a firmer tone in the Canadian dollar also weighing on values.

However, the underlying fundamentals remain supportive, with tightening old crop supplies and the need to ration demand going forward underpinning the market.

About 18,016 canola contracts traded on Tuesday, which compares with Monday when 22,274 contracts changed hands. Spreading accounted for 9,822 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were weaker on Tuesday, as overnight losses in Chinese soybean futures and Malaysian palm oil weighed on values.

Improving weather forecasts out of South America call for drier weather in Brazil over the next 10 days. That added to the softer tone as dry conditions should allow farmers there to make some harvest progress.

Solid crush data tempered the declines. Soybean crushers in the United States processed 193.8 million bushels of soybeans in December, according to data from the U.S. Department of Agriculture. That was a new record for the month, but in line with pre-report expectations.

CORN futures were also weaker on the day, taking some direction from soybeans and wheat.

A lack of fresh business to China, which has made large purchases of U.S. soybeans over the past two weeks, helped values back away from nearby multi-year highs.

However, the USDA did announce flash export sales of 115,000 tonnes of corn to Mexico for delivery during the current marketing year.

WHEAT futures were lower on the day, but held range-bound overall.

Forecasts calling for more precipitation across the U.S. Plains over the next week accounted for some of the selling pressure in wheat, as the moisture should alleviate dryness concerns in the region.

Egypt bought 480,000 tonnes of wheat in its latest tender, but none was from the U.S. While Russia accounted for 120,000 tonnes of the business, looming export restrictions in the country should open the door for more U.S. sales going forward.

The Western Producer

Tags: canola, North America, Grain/Oilseed Review