By Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, July 11 (CNS Canada) – ICE Futures canola contracts were down sharply on Wednesday, as heightened world trade tensions had speculators firmly on the sell side of the market.
The ongoing trade war between the United States and China saw the U.S. announce it was considering placing 10 per cent tariffs on an additional US$200 billion worth of Chinese goods, with China set to reciprocate in kind. Chicago soybeans fell to new lows as a result, with canola and most other North American grains and oilseeds also under pressure.
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Speculators were noted sellers in canola, adding to their growing net short positions. Relatively favourable crop conditions across most of the Prairies were also bearish, although some areas of concern remain.
Scale-down commercial buying provided some support, as end users took advantage of the falling prices.
About 21,395 canola contracts traded, which compares with Tuesday when 14,680 contracts changed hands. Spreading accounted for 7,218 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade fell to their weakest levels in 10 years on Wednesday amid heightening trade tensions between the United States and China.
China is expected to start levying tariffs on more U.S. commodities on top of the soybean tariffs already in place in response to threats of additional U.S. sanctions on Chinese goods.
Relatively favourable Midwestern crop conditions also weighed on values.
The U.S. Department of Agriculture releases updated supply/demand estimates on Thursday, and adjustments to the tables based on the latest trade disruptions are expected.
However, while China may not be buying U.S. soybeans right now, the falling prices are bringing in other customers.
CORN followed soybeans lower, as the grain was also pressured by the global trade concerns and relatively favourable Midwestern weather.
Declining demand from the ethanol sector put some additional pressure on values, with the latest weekly data on the renewable fuel showing rising stocks but the lowest weekly output in seven weeks.
WHEAT futures were also caught up in the broad selling seen in most commodity markets on Wednesday.
Seasonal harvest pressure contributed to the declines, although quality and yield concerns in some areas were a bit supportive.
U.S. wheat prices are also starting to look more competitive compared to European and Black Sea origin grain, which could bring in some scale-down commercial demand.
