Canola was the big loser overnight. Both Winnipeg canola futures and Paris rapeseed futures seeing a significant reduction in new and old crop slots. Chicago beans were lower, but not anything as bad as the canola and rapeseed contracts. Chicago beans shed just 4.75c/bu (AUD$2.60/t) in the Jan 25 slot, compared to –€9.50/t in the Feb slot for rapeseed and -C$18.90 for the Jan25 slot at Winnipeg.
There’s nothing really new from the fundamental side of the market to create such a fall in values. The trade may still be trying to determine how the China / Trudeau debacle will play out. EU punters may expect to see more Canadian offers, grain that would otherwise be going to China competing against non GM product coming in from Australia. This may not play out as expected though. There’s a good chance that Australian canola will bypass the EU and head straight to China to fill the void left by the Canadian ban. The thing that has to play out in the meantime is, will the reduction in values, during the Canadian harvest be enough to stimulate additional Canadian sales into the EU market.
As with wheat, the funds also influence the oilseed market, soy, canola, rapeseed, all of them. The trade dispute between China and Trudeau has seen punters liquidate long positions in favour of being sold in a case like this. This may see prices for Canadian canola push lower in the mid term than one might fundamentally have though support would have been created at.
While on the influence of managed money it was good to see wheat futures at Chicago continue to push higher. HRWW futures closed at or above 600c/bu for the first time since the middle of July. Between now and then, the lowest closing low was 535c/bu (AUD$293.22/t at today’s money) was set in the Dec slot. A close of 600c/bu is equivalent to roughly AUD$328.85/t, a gap of $35.62. During that time local new crop H2 bids NTP NTL have varied from $360/t back in mid July to a low of $309 and are now back at $334. Currency back on the 11th of July was 67.47, so it’s easy to see the erosion of basis that has occurred as the Aussie crop became more secure and US values moved higher.