North American Grain/Oilseed Review: Old crop canola drops sharply

Source: Canadian Cattlemen

By Phil Franz-Warkentin, MarketsFarm

WINNIPEG, March 26 (MarketsFarm) – The ICE Futures canola market was weaker on Friday, with the largest losses in the old crop contracts as speculative fund selling and a lack of buying interest on the other side weighed on prices. The nearby May contract fell by its daily C$30 per tonne limit, while the declines in the new crop months were more subdued.

Losses in Chicago Board of Trade soyoil accounted for some spillover selling pressure in canola, according to participants.

Ideas that end user buying interest for old crop canola was backing away, as their attention turns to the new crop, also weighed on values.

However, the underlying fundamentals of tight old crop supplies remain supportive, which should have made the losses a buying opportunity from a chart standpoint.

About 26,135 canola contracts traded on Friday, which compares with Thursday when 18,585 contracts changed hands. Spreading accounted for 13,154 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were weaker on Friday, with positioning ahead of the weekend and the March 31 acreage estimates from the United States Department of Agriculture behind some of the activity. Sharp losses in soyoil led the bean complex to the downside, with soymeal holding closer to unchanged.

Harvest pressure out of Brazil was also bearish, although declining production estimates out of Argentina, due to dryness there, provided some support.

Pre-report estimates ahead of the USDA’s plantings report call for an increase in U.S. soybean acres on the year, with average guesses of around 90 million acres. That would be up by about seven million acres on the year and a new record for the crop.

CORN was mostly higher, finding support from good export demand over the past few weeks. However, there was no real fresh news on Friday.

Pre-report estimates ahead of next week’s USDA report peg U.S. corn acres in 2021 at 93 million acres, which would be up by about two million acres from 2020.

WHEAT futures were mixed, with a steady tone in Minneapolis spring wheat and gains in the winter wheats.

Wheat prices had slipped to their lowest levels in three months in early activity, but uncovered some support to the downside and managed to move higher.

However, improving crop prospects for winter wheat crops across much of the Northern Hemisphere kept a lid on the upside.