By Phil Franz-Warkentin, MarketsFarm
Winnipeg, Jan. 15 (MarketsFarm) – ICE Futures canola contracts were down sharply on Wednesday, as declines in Chicago Board of Trade soybeans and soyoil weighed on prices.
China and the United States signed phase one of their trade deal in Washington on Wednesday. China agreed to buy more U.S. agricultural commodities, but the lack of details on actual purchases weighed on the grains and oilseeds as investors wait to see if China follows through on its promises.
Losses in Malaysian palm oil, amid increased diplomatic tensions between India and Malaysia, contributed to the declines in canola, according to participants. Large U.S. soyoil stocks also weighed on the vegetable oil markets in general on Wednesday.
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However, ideas that canola remains cheap compared to other oilseeds provided some underlying support.
About 29,972 canola contracts traded on Wednesday, which compares with Tuesday when 18,725 contracts changed hands. Spreading accounted for 18,922 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade were weaker on Wednesday, as the phase one trade deal between the United States and China failed to provide a spark for the market.
The deal signed in Washington does include vague promises from China to increase purchases of agricultural goods over the next two years. However, with no new concrete business announced, a ‘buy the rumour sell the fact’ mentality likely contributed to the losses in soybeans.
The U.S. Department of Agriculture did announce private export sales of 126,000 tonnes of soybeans to China this morning, which were supportive.
Monthly U.S. crush data showed that 174.6 million bushels of soybeans were crushed in the country in December. That was well above average trade estimates and the year-ago level. Oil and meal production both hit record highs for the month of December, and the large soyoil stocks pressured soyoil futures.
CORN was lower on the day, also seeing a muted response to the trade deal.
Weekly U.S. ethanol data showed average daily production of just over a billion barrels per day, marking the fourth most productive week on record.
The Chinese agreement did include talk of increased ethanol sales to China, which was slightly supportive.
WHEAT futures were mixed, with gains in Chicago soft wheat and a steady tone in the Minneapolis and Kansas City hard wheat contracts.
Talk that Russia would be putting limits on exports contributed to the chart-based buying strength in wheat.
