By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
January 13, 2015
Winnipeg – ICE Futures Canada canola contracts ended mostly higher on Tuesday, seeing a bit of a correction amid ideas that Monday’s losses were overdone.
Speculative funds were noted buyers adding to their long positions, as the nearby technical signals remain pointed higher for canola, according to participants.
Steady demand from domestic crushers provided some underlying support as well. However, basis levels were widening out across the Prairies, which was seen as a sign that end users may be filled for the time being, said traders.
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A softer tone in CBOT soybeans did serve to limit the upside potential in canola. The large US soybean supply situation and relatively favourable South American growing conditions were also overhanging the market.
About 20,820 canola contracts were traded on Tuesday, which compares with Monday when 23,758 contracts changed hands. Spreading accounted for 13,088 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CBOT SOYBEAN futures ended five to 12 cents US per bushel lower on Tuesday, undermined by chart-based selling, analysts said.
Larger than expected 2014/15 US production and ending stocks estimates from the USDA’s monthly crop report on Monday continued to overhang values.
Generally beneficial weather for most of the South American soybean crop ahead of harvest also weighed on the market.
However, demand remains sold for the US commodity, which tempered the downside.
SOYOIL futures were slightly lower on Tuesday, taking some direction from soybeans. Though, ongoing worries about unfavourable weather hurting Malaysian palm oil crops were supportive, brokers said.
SOYMEAL futures were lower, seeing some follow-through selling on Monday’s sharp declines, analysts said.
CORN futures in Chicago finished sharply lower as well, falling below the psychological level of US$4.00 per bushel in the March contract. Values finished 14 to 17 cents US per bushel lower.
The large US supply situation was behind the declines, as were chart-based selling and ongoing weakness in the crude oil market, according to brokers.
However, ideas that weak corn prices will cause farmers to shift some acres out of corn, and into soybeans in the US this spring, limited the downside.
WHEAT futures in the US ended lower, with Chicago Board of Trade, Minneapolis and Kansas City futures ending six to 10 cents US per bushel weaker.
Weakness in outside grain and oilseed markets, including Chicago soybeans and corn, spilled over to weigh on wheat futures, traders said.
The large global supply situation and ongoing strength in the US dollar were also bearish. The strong greenback made US wheat less attractive to foreign buyers.
However, concerns about lower wheat production in the US next year, after the USDA showed a smaller than expected acreage figure for US winter wheat in Monday’s report, limited the losses.
• Conab, Brazil’s national supply company, reduced their wheat production estimate for the country to 5.9 million tons, down from their previous estimate of 7.6 million tons. The quality of the grain was also affected by bad weather in the southern part of the country.
• The Georgian government may import wheat from Europe and the US instead of Russia, due to recent export restrictions imposed by the country, reports say.
• As of January 6, 2015 Ukraine exported 19.61 million tonnes of grains for the 2014/15 crop year, the country’s Ministry of Agrarian Policy and Food said.
Settlement prices are in Canadian dollars per metric ton.
