By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
February 25, 2015
Winnipeg – ICE Futures Canada canola contracts were down at Wednesday’s close, with speculative profit-taking following Tuesday’s gains behind some of the weakness.
The biggest losses were in the nearby March contract, as traders exited the front month and it moved back below the more active May contract.
While the general technical trend remains pointed higher, a trader said the funds were likely booking some profits on their very large long positions. Losses in CBOT soybeans and strength in the Canadian dollar likely provided the catalyst for some of the selling.
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The recent strength in canola also brought in more farmer selling, although a trader noted that softening basis levels would likely limit those sales to some extent.
Gains in CBOT soyoil did provide some underlying support for canola, according to participants.
About 32,309 canola contracts were traded on Wednesday, which compares with Tuesday when 44,102 contracts changed hands. Spreading accounted for 24,138 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
Chicago soybean futures ended five to eight cents US per bushel softer on Wednesday, undermined by profit taking and farmer selling on Tuesday’s rally, analysts said.
Optimism that the truck strike in Brazil will be resolved soon also undermined the market, as did ongoing expectations of a large South American soybean crop.
However, continued strong export demand for US soybeans, due to the logistics problems in Brazil and a slow harvest in South America, limited the downside.
SOYOIL futures were stronger on Wednesday, supported by reports that palm oil production outlooks in Malaysia and India are shrinking.
SOYMEAL futures were softer, undermined by profit taking on recent gains. Though, continued strong demand for the commodity limited the downside, brokers said.
CORN futures in Chicago finished half a cent to two cents US per bushel lower on Wednesday, taking some direction from the weakness seen in wheat and soybeans.
Signs of slowing demand from the domestic ethanol industry and weakness in crude oil values were also bearish, industry watchers said.
However, continued slow farmer selling in the US and steady demand from the domestic feed sector kept a firm floor under the market.
WHEAT futures in the US ended lower. Chicago, Minneapolis and Kansas City wheat futures ended five to 13 cents US per bushel softer.
Improving weather conditions for the US winter wheat crop weighed on values, traders said.
A continued lack of significant fresh export demand for US wheat supplies, as strength in the US dollar index is making prices more expensive, further undermined prices.
Though, there was some slight support coming from news that Egypt purchased 290,000 tonnes of US wheat with a $100 million line of credit extended by the US government.
• According to reports, Iraq cancelled a tender they placed for 50,000 tonnes of wheat. Bangladesh issued a tender for 50,000 tonnes of wheat from an optional origin.
• Wheat crop prospects in India are looking good, as weather conditions are more favourable than at the same point last year, an official with the country’s farm ministry said.
• Farmers in Ukraine will likely have to reseed about 15 per cent of the acres they planted to winter crops this year, the country’s agrometeorology department said.
Settlement prices are in Canadian dollars per metric ton.
