There is a significant amount of conflicting data in the oilseed markets these days. Tuesday's Dow Jones headlines showed China's soybean imports for July reached a monthly record of 10.08 million metric tons while since January, 54.89 mmt has been imported which is 17% higher than the same period last year. January through July edible-oil imports are reported at 3.04 mmt, up 5.4% from the same period last year. At the same time, media reports point to a backlog of vessels to be unloaded in China's harbors while Chinese buyers are reported to be reselling large volumes of soybeans partially due to losses faced by crushers.
Similar conflicting data has been released in recent days, with the USDA announcing a soybean sale cancellation by an unknown buyer today, which is more than offset with the announcement of an old-crop sale to unknown buyers earlier in the week, arousing some suspicions.
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Despite the uncertainty, ICE Canada reported that the Vancouver cash basis strengthened $2/mt on Tuesday to $25/metric ton over the November future, the first sign of strength seen in almost two months. Canadian dollar weakness is playing a partial role here, which reached its lowest level in over three weeks in Wednesday's trade against its United States counterpart.
The future itself is forced to do the heavy lifting in terms of attracting sellers, with the current Vancouver cash basis $5 weaker than the same day last year and $13/mt weaker than the five-year average. While canola's forward curve remains a bearish upward-sloping line, which is simply a line that connects the close for each consecutive contract month, commercial traders are taking a neutral stance given the Nov/Jan spread of $5.30/mt, which is close to 50% of full carry.
The average cash basis on the prairies has also shown strength since late last week for all delivery months, with eastern prairie bids shown to strengthen. The average August delivery basis is calculated at $26.99/mt under the November, which compares to $37.75/mt calculated this time last year but is weaker than the three-year average of $24.54/mt.
Cliff Jamieson can be reached at firstname.lastname@example.org
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