By Dave Sims and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, January 20 – The ICE Futures Canada canola market finished stronger on brisk trading Tuesday as pronounced weakness in the Canadian dollar pushed values higher. The loonie was down a cent against its American counterpart which made canola more attractive to crushers and exporters.
A lack of farmer selling added to the upside while funds were active buyers.
However, weakness in the US soy complex, Malaysian palm oil and European rapeseed futures limited the gains.
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The South America harvest is looming nearer which is pressuring values as expectations are that the crop will be very large.
One trader said canola was overpriced compared to US soybeans and canola values could plummet suddenly if the scenario doesn’t change soon.
Around 30,012 canola contracts were traded on Tuesday, which compares with Monday when around 6,372 contracts changed hands. Spreading accounted for 22,074 of the contracts traded.
Milling wheat, barley and durum were all untraded.
SOYBEAN futures at the Chicago Board of Trade were down seven to 12 cents per bushel on Tuesday, as declining export demand weighed on values.
This morning the USDA reported that exporters had cancelled sales of 174,000 tonnes of soybeans that had been destined to China. That news follows the cancellation of 285,000 tonnes on Friday, as end users are turning their attention to cheaper South American supplies.
Nearby forecasts remain relatively favourable for development and early harvest operations in South America.
The US dollar index was stronger on Tuesday, which was bearish for the US grains and oilseeds in general.
SOYOIL futures were down on Tuesday, with large losses in crude oil and outside vegetable oil markets weighing on values.
SOYMEAL futures were narrowly mixed on Tuesday, lagging the rest of the soy complex to the downside as the product spreads saw some adjustments.
CORN futures in Chicago were up by two to three cents per bushel at Tuesday’s close, recovering from earlier losses as some chart support was uncovered on the downside and speculators moved back to the buy side.
Solid export demand contributed to the eventual move higher, as weekly export inspections of about 750,000 tonnes were up from the previous week.
However, losses in crude oil did limit the upside potential in corn, as cheaper oil is cutting into the profit-margins of ethanol producers.
WHEAT futures in Chicago were up by four to six cents per bushel on Tuesday, also recovering from earlier losses.
March wheat dipped to its lowest levels in over two months in early activity, but managed to bounce higher amid oversold price sentiment. Continued reports of Russian export restrictions helped underpin wheat values as well.
A slight improvement in the weekly export inspections data was also supportive, although US wheat is still thought to be expensive in the global market.
Forecasts calling for some beneficial moisture across much of the US winter wheat belt also limited the upside potential.
– Russia could export up to 18.5 million tonnes of wheat without hurting its own domestic consumption, according to the country’s agriculture ministry.
– Wheat seedings in Iraq are expected to be down sharply on the year, as farmers in those areas controlled by the Islamic State (ISIS/ISIL) reported a lack of adequate seed, fertilizer and fuel. Concerns over selling the crop in the militant controlled area were also reported.
– A warming world climate would cut into global wheat production, according to a new report from researchers at the University of Florida. The computer models created by the researchers show that for every degree Celsius that average temperatures increase the world would stand to lose 6 percent of its wheat crop.
