Canada Markets

Oilseeds Continue to Signal Firm Demand

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The brown line on the attached chart shows the trend in Dalian GMO soybean futures (weekly), which gained 2.8% during the week, trending sharply higher. ProphetX data for both Canadian canola (blue line) and Australian canola (red line) C and F China's ports shows sideways trade. (DTN ProphetX chart)

We are in the middle of the harvest of the world's largest soybean crop in Brazil, although the recent trend in GMO soybean futures on the Dalian Exchange would suggest that concerns continue to grow.

As indicated by DTN Lead Analyst Todd Hultman in this morning's Before the Bell Report, the Dalian Exchange contract for GMO soybeans gained 2.6% on Friday to close at $21.77/bushel USD or $799.92/metric ton. The brown line on the attached chart signals a 2.8% increase during the course of the week, while gaining $166.94/mt or 26.4% since the recent low reached on Nov. 1.

While ICE Canada canola is tending to trade sideways (May contract), we see a similar pattern for both Canadian canola and Australian canola C&F Chinese ports, priced in U.S. dollars. Since Nov. 1, Canadian canola has traded over a $55.50/mt USD range, with this week's close near the lower end of the range. Since the week of Dec. 13, Australian canola has ranged over a narrow range of $45.55/mt USD, with this week's close in the upper half of this range.

While canola has struggled to keep with recent gains, this chart would indicate that it simply made its move earlier than soybeans.

The saying a rising tide lifts all boats comes to mind. This week's contract high in both soybean oil and all-time high close in Malaysian crude palm oil signal growing concern over supplies, while taking place during a week when NYMEX crude oil posted a weekly loss and acted to weigh on trade.

This week's contract high in November canola and weekly close above $850/mt may signal that focus has shifted to new crop, which bears watching.


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