By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
December 1, 2014
Winnipeg – ICE Futures Canada canola contracts were down on Monday, as bearish technicals and a sharp rise in the Canadian dollar weighed on prices.
The Canadian dollar was up by over three quarters of a cent relative to its US counterpart, which cuts into crush margins and makes canola more expensive to end users pricing in US dollars.
Recent price activity was said to be looking bearish from a chart perspective, which was keeping fund traders on the sidelines, according to a broker. Commercial participants were also not showing very much demand, aside from on a scale down basis.
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While demand was lacking, farmer selling on the other side was also light, according to a broker. He said cold temperatures across much of Western Canada were likely limiting any country movement.
A firmer tone in soyoil did provide some underlying support for canola as well.
Statistics Canada releases updated production estimates on Thursday, December 4, and positioning ahead of the report was expected to be a feature over the next few days.
About 27,210 canola contracts were traded on Monday, which compares with Friday when 16,248 contracts changed hands. Spreading accounted for 17,934 of the contracts traded.
Milling wheat and durum were both untraded, while barley held steady in light activity.
SOYBEAN futures at the Chicago Board of Trade were steady to 2 cents US per bushel higher on Monday, seeing an upward correction following Friday’s sharp declines, analysts said.
Continued good domestic crusher and export demand were also underpinning values. The USDA pegged weekly export inspections at a solid 1.849 million tonnes for soybeans.
However, the large US crop, and news that conditions remain favourable for soybean production in South America were limiting the advances.
SOYOIL futures finished slightly higher on Monday, as crude oil values were also recovering following last week’s sharp declines, participants said.
SOYMEAL futures were weaker Monday, with spreading against soyoil a feature of the activity.
CORN futures in Chicago finished steady to two cents per bushel higher on Monday, finding some spillover support from the gains seen in wheat.
Signs of improving export demand for US corn were also underpinning values. Weekly export inspections were strong at 743,769. The USDA also announced a sale of 126,000 tonnes to an unknown destination.
However, the large US crop and weakening demand from the ethanol sector were weighing on values. Margins for ethanol processors are narrowing in due to sliding oil values, market watchers said.
WHEAT futures were up sharply, with the Chicago futures ending 26 to 29 cents US per bushel higher on Monday and hitting a five-month high during the trading session. Minneapolis and Kansas City futures closed eight to 29 cents higher.
The advances were linked to news that Russia’s Veterinary and Phytosanitary Surveillance Service (VPSS) is implementing new regulations that may lead to a drop in grain exports from the country, brokers said.
Ongoing worries about cold weather damaging winter wheat crops in Ukraine, Russia and the US, and possibly reducing production, were also bullish.
Buy stops were hit on the way up and helped to exaggerate the advances, according to analysts.
• The EU is expecting SRW exports to hit a record 30 million tonnes this year, which is higher than the current USDA estimate by about 2 million tonnes.
• Argentine grain exports are up 85.7 per cent over year ago levels, and the country is getting closer to a new yearly record, according to reports.
• Farmers in the state of Paraná in Brazil have 99 per cent of the wheat crop harvested, data from the state’s Department of Agriculture shows.
Settlement prices are in Canadian dollars per metric ton.
