By Phil Franz-Warkentin and Jade Markus, Commodity News Service
Winnipeg, Dec. 16 – ICE Futures Canada canola contracts moved lower on Wednesday, as losses in CBOT soybeans and soyoil spilled over to weigh on the Canadian oilseed.
The potential for increased soybean exports out of Argentina, losses in crude oil, a lack reforms to tax credits for biodiesel production in the US, and Canada’s large supply situation all contributed to the losses, according to participants.
Attention throughout the day was on the US Federal Reserve and its much anticipated 25 point increase in interest rates that was announced just before the close. The Fed move was supportive for the US dollar, but weighs on the Canadian currency.
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The weaker Canadian dollar provided underlying support for canola, with both exporters and domestic crushers showing some good scale down demand.
About 25,898 canola contracts were traded on Wednesday, which compares with Tuesday when 24,023 contracts changed hands. Spreading accounted for 19,218 of the contracts traded.
Milling wheat, durum, and barley futures were all untraded, although wheat prices were revised after the close.
SOYBEAN futures at the Chicago Board of Trade closed four to six cents per bushel lower on Wednesday as the US Federal Reserve raised interest rates.
An interest rate increase boosts the US dollar, which in turn makes US commodities less competitive globally.
US soybean exports have already been lagging, and a stronger US dollar further magnifies that issue, which is bearish.
Argentina’s president is expected to move to devalue the country’s currency-which would lead to increased exports, and further added to the bearish tone.
SOYOIL prices settled lower on Wednesday, pressured by the Fed decision and a stronger US dollar.
SOYMEAL closed weaker on Wednesday, following nearby grain and oilseed markets.
CORN futures closed six to seven-and-a-half cents per bushel weaker on Wednesday, as market watchers expect reduced ethanol usage.
The expectation that Argentina’s currency could devalue soon also pressed prices.
The Fed announcement further added to the bearish tone.
WHEAT closed eight to eleven cents per bushel weaker on Wednesday with no bullish news to save the market.
US wheat has already struggled with a lack of competitiveness in the midst of a global supply glut—a stronger US dollar further amplifies the issue.
– Syria announced a tender for up to 200 thousand tonnes of soft wheat, according to reports.
– Analysts say Tunisia is tendering for at most 100 thousand tonnes of wheat for delivery in February/March.
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