North American Grain/Oilseed Review: Canola corrects sharply higher

The ICE Futures canola market was stronger on Wednesday, with the largest gains in the front months as speculators returned to the buy side after booking profits on long positions in recent days.

Strength in Chicago Board of Trade soybeans and soyoil contributed to the firmer tone in canola, although the Canadian oilseed outpaced its United States counterparts to the upside after leading to the downside during the selloff.

Canada’s tight supply situation remained another supportive influence, although the need to ration demand is thought to be well priced into the market for the time being.

The Canadian dollar was stronger on the day, moving above 80 U.S. cents and tempering the upside in canola somewhat.

About 30,877 canola contracts traded on Wednesday, which compares with Tuesday when 22,158 contracts changed hands. Spreading accounted for 12,876 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were due for a correction after recent losses, settling with solid gains.

While rain in South America was helping alleviate some of the dryness concerns there, more precipitation will be needed and the longer range forecasts remain hot and dry.

Production estimates out of Argentina are coming in well below the United States Department of Agriculture’s current 46.5 million tonne forecast.

Meanwhile, Brazilian farmers are just getting started with the harvest in some areas.

Gains in crude oil were supportive for soyoil, which underpinned beans.

CORN saw an extension of Tuesday’s late advances, with the move back above US$6.00 per bushel bullish from a chart standpoint.

Expectations on the size of Argentina’s corn crop are wide ranging, with estimates out of the country anywhere from 48 million to 57 million tonnes. The USDA currently pegs the crop at 54 million tonnes.

WHEAT posted strong gains for the second day in a row. Cold temperatures across key U.S. winter wheat growing areas were raising concerns over downgrades, especially as much of the crop was seeded into dry fields.

The geopolitical tensions between Russia and Ukraine were also keeping some caution in the wheat market, as the two countries are both major world wheat exporters.

The Western Producer

Tags: soybean futures, corn futures, soyoil, canola market, wheat futures, Market