By Phil Franz-Warkentin, Commodity News Service Canada
November 12, 2014
Winnipeg – ICE Futures Canada canola contracts moved lower on Wednesday, backing away from earlier advances. The biggest declines were in the nearby January contract, as the premiums that had been built into the front month eroded and it moved back below the more deferred positions.
Canola started the day posting solid gains, moving up by as much as nine dollars per tonne in the most active January contract as the market played ‘catch up’ with the US soy complex that had rallied sharply when ICE Canada was closed Tuesday for Remembrance Day. While soybeans initially saw some follow through strength on Wednesday, the Chicago futures eventually turned lower and canola followed suit, said traders.
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A stronger tone in the Canadian dollar contributed to the eventual weakness in canola, said participants.
Some light farmer selling was also noted, although producers remain on the sidelines for the time being.
Good exporter and domestic crusher demand on a scale down basis did provide some underlying support. The nearby technical bias also still remains pointed higher for canola, making any losses a good buying opportunity from a chart standpoint, according to analysts.
About 25,823 canola contracts were traded on Wednesday, which compares with Monday when 13,081 contracts changed hands. Spreading accounted for about 15,090 of the contracts traded.
Milling wheat and durum were both untraded, while barley moved higher with 25 contracts traded.
SOYBEAN futures at the Chicago Board of Trade were down 11 to 18 cents per bushel on Wednesday, as the market ran into some resistance to the upside and backed away from nearby highs.
Soybeans rallied sharply on Tuesday, as good export demand and concerns over the tight soymeal supply situation provided support. The market did see some follow through buying interest in overnight activity, but those gains proved short lived, as soybeans ran into chart resistance and turned lower, said traders.
The record large US crop prospects and ideas that the soymeal supply issues will soon be rectified contributed to the declines in soybeans.
SOYOIL futures finished lower on Wednesday.
SOYMEAL futures were lower on Wednesday, backing away from nearby highs.
CORN futures in Chicago were up two to four cents per bushel on Wednesday, hitting their highest levels in four months. Advances in the neighbouring wheat market accounted for much of the spillover buying interest in corn, as the two grains are linked by their usage as a livestock feed.
Monday’s monthly USDA supply/demand report, which included a downward revision to the estimated size of this year’s US corn crop, remained somewhat supportive as well. However, the corn crop is still expected to be record large, and the advancing US harvest did temper the upside potential.
WHEAT futures in Chicago were up 15 to 17 cents per bushel on Wednesday, with speculative short-covering accounting for much of the strength.
Cold weather conditions in parts of the US Plains provided some further support, as the winter weather raised some concerns over possible damage to the wheat crops there.
On the other side, the large global supply situation did remain a bearish influence limiting the upside potential in wheat.
Settlement prices are in Canadian dollars per metric ton.
