North American Grain/Oilseed Review: Canola Bounces Higher With Soybeans
By Phil Franz-Warkentin and Marney Blunt, Commodity News Service Canada
July 14, 2014
Winnipeg – ICE Futures Canada canola contracts moved higher on Monday, as the market was due for a corrective bounce after Friday’s sharp declines.
A recovery in the US soy complex contributed to the gains in canola, according to participants.
Ongoing uncertainty over the extent of the damage caused by excess moisture and flooding in parts of Manitoba and Saskatchewan remained supportive for canola as well. In addition, mounting concerns over hot and dry weather in parts of Alberta were also said to be underpinning the futures.
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However, canola remains bearish from a technical standpoint, which limited the upside potential, according to a broker. A stronger tone in the Canadian dollar put some pressure on values as well.
About 10,505 canola contracts were traded on Monday, which compares with Friday when 15,826 contracts changed hands. Spreading accounted for 4,374 of the contracts traded.
Milling wheat, durum and barley futures were untraded and unchanged.
SOYBEAN futures slightly higher on Monday, as investors were concerned over ideas that the Midwest may receive hot weather conditions in August, which could damage production, analysts say.
Soybeans prices closed with a difference of 10 cents US per bushel between August and November futures.
Soybeans are planted later than corn, so unfavourable weather conditions in the next six weeks likely won’t hurt the grain, but could damage production of oilseeds, traders say. However forecasters are currently predicting that cool, wet weather will persist until the end of July.
SOYOIL futures closed slightly higher on Monday.
SOYMEAL futures closed higher on Monday.
CORN futures in Chicago were closed slightly higher on Monday, despite ideal weather conditions for pollination and high yields, broker say.
Corn contracts were up 3.25 to 3.50 cents US per bushel on Monday.
On top of the favourable weather conditions, the USDA has also released bearish results for old and new crop. However, there still is a greater risk that yields could increase in the August report leaving the upside to U.S. production and carryout estimates, analysts say.
World production and carryout levels continue to rise, leaving a very competitive export market ahead. The USDA had forecast U.S. production for the 2014/15 season at 1.801 bushels, up from June’s estimate of 1.726 billion bushels.
WHEAT futures in Chicago finished higher Monday on speculation that demand for inventories from the U.S. will improve after prices touched their lowest level in more than four years on Friday, traders say.
Wheat contracts closed between 11.75 12.75 cents US per bushel higher on Monday.
However, higher domestic supply and another increase in world inventories remained bearish for the wheat market, brokers say.
Total U.S. wheat production for the 2014/15 season was forecast at 1.992 billion bushels, in comparison with last month’s estimate of 1.942 billion bushels.
• Second wheat is remaining a firm fixture in most East Anglian crop rotations, despite the impending three rule being brought in as part of Common Agricultural Policy reform measures, escalating grass weed problems and weaker crop markets, according to the latest National Second Wheat Management study.
• The survey also showed that selecting good second wheat varieties, using a take-all seed treatment and preparing for better seedbeds were the key management techniques used to address these challenges.
• A telephone survey of more than 100 East Anglian and East Midlands farmers, commissioned by seeds and agrochemical form Monsanto this spring, revealed that 85 per cent of farmers are intending to plant second wheat this autumn.
Settlement prices are in Canadian dollars per metric ton.
