By Dave Sims and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, February 11 – THE ICE Futures Canada canola market finished stronger on Wednesday – as weakness in the Canadian dollar encouraged buying from large funds.
The US soy complex was higher which underpinned the market while commercial activity was steady which helped to support canola values.
Many funds began to move their March positions into May, said an analyst.
“Funds are long on canola because of the Canadian dollar while the soy situation is negative; so they’ve been in these positions for months and months. They’re just trying to squeeze more money out of them,” he said.
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However, weakness in Malaysian palm oil and European rapeseed futures limited the gains.
Yesterday’s USDA report indicates the world soybean crop will be record large, which was bearish for canola.
Around 21,779 canola contracts were traded on Wednesday, which compares with Tuesday when around 20,010 contracts changed hands. Spreading accounted for 18,268 of the contracts traded.
Milling wheat, barley and durum were all untraded.
SOYBEAN futures at the Chicago Board of Trade were up by four to nine cents per bushel on Wednesday, seeing a corrective bounce following Tuesday’s declines.
End-user bargain hunting accounted for some of the buying interest, according to participants. Export customers were said to still be looking to buy US beans before South American production becomes more readily available.
Spreading was a feature of the activity, as fund traders were busy rolling their positions out of the nearby March contract.
The tightening supply projections from the USDA on Tuesday were also somewhat supportive, although continued expectations for a record large Brazilian crop did temper the upside potential.
SOYOIL futures were higher on Wednesday.
SOYMEAL futures finished higher on Wednesday, taking back most of Tuesday’s declines.
CORN futures in Chicago were down by two to three cents per bushel, as large world supplies and mixed ethanol data weighed on values.
US ethanol production was up during the week, according to a government report, which was somewhat supportive. However, ethanol stocks were higher, which may limit future demand for corn as a feedstock.
WHEAT futures in Chicago were steady to up four cents per bushel on Wednesday, seeing some consolidation following Tuesday’s losses.
Speculative positioning and end user bargain hunting provided some underlying support throughout the session, according to participants.
However, the ample world supply situation did remain a bearish influence as the market continued to digest Tuesday’s USDA supply/demand estimates that included upward revisions to the world wheat stocks forecast.
Uncertainty over the conflict in Ukraine remained in the background of the wheat trade, as the region is a major player in the global export market.
– Government weather forecasters in Japan are now predicting a 50% chance that an El-Nino weather pattern will develop over the summer.
– Egypt, the world’s largest wheat importer, is reported to be in negotiations with Russia to obtain an exemption to Russia’s wheat export tariffs.
– Morocco has tendered to purchase 360,000 tonnes of wheat, according to reports.
