Canola Gains on Frost Events, Tight Supplies, Positive China Developments

GENERAL COMMENTS:

A wide variety of positive factors have buyers cautiously emerging to start the week despite good harvest weather for the western half of the Canadian Prairies. News that China has delayed the final ruling on the Canadian canola anti-dumping investigation until March 9, 2026, has been met with cautious optimism when it coincided with word out of Ottawa that work is underway reviewing tariffs on Chinese EVs, steel and aluminum. The developments happened to come at a time when Saskatchewan Premier Scott Moe led a delegation to China to try to make progress on the issue. Patchy weekend frost across the Canadian Prairies and northern Corn Belt provided limited support as the trade tries to assess impacts. Canola would be more of a quality issue while soybeans in Manitoba, the Dakotas and Minnesota could see yield impacts. On top of all of that, exceptional new crop U.S. export sales reported Friday along with tight canola supplies found in the holiday delayed CGC’s grain statistics weekly report provide solid underlying support. As does higher energy markets on smaller than feared OPEC+ production increases and higher palm oil values on expected slowing of production growth and the narrowing of the premium to soybean oil. Outside markets are still digesting Friday’s weak August payroll report that inspired a sharp jump in treasuries and break in the U.S. dollar.

OUTSIDE MARKETS:

Treasury markets are mixed following a sharp rally Friday on a weaker-than-expected August payroll report. To add insult to injury, negative revisions to the previous two months took June payroll additions into negative territory. Based on the weakening labor situation, the market is now pricing in one quarter point cut for each of September, October and December meetings. The report was weak enough there is a 12% probability being priced in that the September cut is half a percent. Technically speaking, that resulted in the 10-year note rallying off the 25-day moving average with prices currently at levels not seen since April. The weak labor data is now aligning with the political will to see interest rates fall, leaving little to prevent such a move. The U.S. 10-year note is at 4.08%.

The U.S. dollar is extending losses seen Friday following the weak August payroll report, retreating yet again from its 100-day moving average Thursday, a clearly bearish technical sign. The Sept U.S. dollar is .113 lower at 97.615.

Equity markets are recovering from losses inspired by the labor report. That had left a reversal from record highs for the S&P, something the bulls will want to trade over as soon as possible to negate.

Energy markets are higher, bouncing back from last week’s losses inspired by fears of another increase in OPEC+ production quotas for October from this past weekend’s meetings. In the end they did increase some members’ quota to the tune of 137,000 barrels per day (bpd) compared to the 547,000-bpd increase seen for September. Ideas that members are not even able to fill those quotas are helping. October crude oil is $1.13 per barrel higher at $63.00.

The Sept Canadian dollar is up .00250 at $.72490. The Brazilian real is down .00040 at .18330. December gold is up $4.00 per ounce at $3657.30.

OILSEEDS:

Canola is stronger on the variety of factors covered in the general comments. The delayed CGC weekly grain statistics report for week 4 reported commercial stocks tightened even further amid harvest delays and a lack of carryover stocks at just 540,000 mt. So tight that exports had to be curtailed for a third week in a row as producer deliveries only increased slightly as harvest began. Producer deliveries were only 624,500 metric tons (mt) in the first four weeks of the new crop year versus 1.308 million metric tons (mmt) last year. Exports had to fall to 47,900 mt from the previous week’s already low level of 78,500 mt with ships waiting, bringing the year-to-date (YTD) total to just 482,300 mt versus 1.005 mmt last year. Domestic use was able to pick up steam with 893,000 mt YTD crushed compared to 869,200 mt last year. The improved harvest weather that weighed on values to end last week surely improved the short-term supply situation but will do nothing to help resolve the limited supply amid strong demand long term. In the meantime, Friday’s Commitments of Traders (COT) report confirmed managed money traders had continued selling off their long positions during the week ending Sept. 1. After another 9,044 contracts being liquidated on the week, they had reduced their net-long position to just 20,160 contracts. November canola is $7.20 higher at $624.00/mt.

Palm oil is higher as mentioned in the general comments. The October contract is up .75%.  

Soybean oil is higher following a disappointing close Friday with very weak energy markets weighing. Now that those are rallying, so is soybean oil. The latter market will be watching palm oil closely given the lack of supplies available to have another export surge based on a discount to palm oil. Technically speaking, a leg up from the saucer bottom that’s been years in the making remains as the primary technical influence going forward, despite the gap being filled.

European rapeseed is quietly higher to start. November rapeseed is .50 euros higher at 461.75 euros per mt.

Soybeans are only quietly higher as traders try to assess the impact of patchy frost over the weekend in the northern Corn Belt. The trade is accustomed to normally sell into rallies inspired by such weather scares but given the multiple challenges the crop faces, further gains could be expected. Much below-normal precipitation is expected to cover the Corn Belt south and east of Iowa going out to Sept. 21 at least, with it looking like the production period will end without meaningful rain. That traditionally cuts yield due to smaller seed size. It’s worth remembering that a disappointing yield combined with the sharp cut in acres will cement a drop in production while there is plenty of time for export demand to expand, either from China or other global importers that are having trouble sourcing from South America due to added Chinese demand there. Another strong week of new crop export sales reported Friday along with a flash sale announcement for 327,650 mt to unknown destinations is a perfect example.

WHEAT:

Wheat markets are quietly higher, still trying to form a bottom following new contract lows being set yet again Thursday. Even though they are new lows for the December contracts, they are still (barely) above multi-year lows set on nearby contract continuation charts. That may attract some bargain hunting and fund short covering. Friday’s COT report confirmed that between Chicago and Kansas wheat markets, managed money traders had returned to the sell side ahead of the Sept. 1 cutoff. They were net short 136,624 contracts or 683 million bushels (mb). To put that in perspective — the ending stocks estimate for those two categories of wheat is only 548 million bushels. Short covering by this group is likely the best hope for any meaningful rally.

CORN:

Corn is quietly lower despite the weekend patchy frost and the warm and dry extended forecasts. Another very strong new crop sales total in Friday’s weekly update put the year-to-date total into record territory, over double the pace seen in each of the past three years, providing further clues that the harvest low may indeed be set for prices. See more at https://www.dtnpf.com/agriculture/web/ag/blogs/canada-markets/blog-post/2025/09/04/harvest-low-already-set-corn-market. It’s worth noting that Friday’s COT report showed net purchases yet again by managed money traders of 19,199 contracts for the week ending Sept. 1 and another 12,633 contracts by commodity index traders. That takes the three-week net buys to 129,765 contracts or 649 million bushels since Aug. 11 for the two groups — adding credibility to concerns over drought and disease inspired yield losses. The managed money traders remained net short 91,487 contracts or 457 million bushels with plenty of buying potential remaining. Technically speaking, the sharp rally off support at the 25-day moving average and early August resistance (now support) suggests an attempt by the market to fill the gap lower on July 7 would make sense. It would take a rally to $4.33/bushel in the December contract to accomplish that.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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