North American Grain/Oilseed Review: Weak C$ underpins canola
By Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, Dec. 18 (CNS Canada) – ICE Futures canola contracts ended higher on Tuesday, as weakness in the Canadian dollar provided support.
The currency fell to its lowest levels relative to its United States counterpart since June 2017, which helped crush margins improve.
Speculators covering short positions, spillover from Chicago Board of Trade soybeans and a seasonal slowdown in farmer selling all contributed to the gains in canola, according to participants.
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However, sharp losses in crude oil kept some caution in the market amid concerns that the bearishness in the energy sector could spill into the oilseeds.
About 36,578 canola contracts traded, which compares with Monday when 31,956 contracts changed hands. Spreading was a major feature of the activity, accounting for 29,052 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade posted small gains on Tuesday, as talk of additional Chinese business provided some support.
However, there was not confirmation of any fresh sales, as the United States and China continue to work towards a longer-term solution to their trade war.
The U.S. government announced a second round of Market Facilitation Program (MFP) payments on Monday, which are intended to offset the negative impact of Chinese tariffs.
Dryness concerns in parts of Brazil were somewhat supportive, although soybean crops in South America are still expected to be large overall.
CORN futures were steady to higher, with the MFP payments to U.S. farmers also providing some support.
However, large supplies tempered the upside. The U.S. Grain Council estimated that 94 per cent of the country’s corn crop graded as number 2 or better in 2018, with total corn production likely the third largest on record.
Losses in crude oil also weighed on the ethanol-linked grain.
WHEAT futures were weaker on Tuesday; taking back some of their recent advances as speculators adjusted positions.
While U.S. wheat is starting to look more competitive on the international markets, it’s still missing out on some export business.
