By Dave Sims and Terryn Shiells, Commodity News Service Canada
Winnipeg, Oct. 28 – ICE Futures Canada canola contracts settled higher on Tuesday, making gains on follow-through buying after yesterday’s rally.
Many producers are not selling right now which added to the rally, said a trader. Large funds pushed their November short contracts into January, as evidenced by the sharp difference in volume between the two months.
Gains in Malaysian palm oil, CBOT soyoil and European rapeseed futures lent support to values. The Canadian dollar was stronger which limited the gains.
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There are fears the canola rally could crumble at any time due to the volatility in the soymeal market. Soymeal started out strong before ending the day slightly weaker.
About 34,283 canola contracts were traded on Tuesday, which compares with Monday when 21,555 contracts changed hands.
Milling wheat and durum were untraded while 100 barley contracts changed hands.
Settlement prices are in Canadian dollars per metric ton.
SOYBEAN futures at the Chicago Board of Trade were mostly higher on Tuesday, with the only declines seen in a few of the more deferred contracts. Values ranged from eight cents lower in the November 2015 to March 2016 contracts, to three cents higher in some of the more nearby futures.
Strength in the US cash soymeal market, due to concerns about tight supplies because of logistics issues, was helping to underpin prices, analysts said.
Slow farmer selling and steady demand for US soybean supplies was also lifting the market.
However, pressure from the advancing US harvest, as conditions remain favourable this week, limited the upside. Ongoing expectations of record large soybean production in the US were also bearish.
SOYOIL futures finished higher, seeing a correction following Monday’s losses. Strength in global vegetable oil markets was also bullish, brokers said.
SOYMEAL futures were slightly lower on Tuesday, undermined by profit taking after Monday’s surge in prices, market watchers said.
However, continued strength in the cash market, due to tight supplies and strong demand, limited the declines.
CORN futures in Chicago settled unchanged to 1 cent US per bushel higher on Tuesday, seeing a consolidation following a recent rally, traders said.
Talk that there may be problems getting corn to domestic ethanol plants due to rail car shortages in parts of the US further underpinned values.
Concerns about slow harvest progress in the US, as it was only 46 per cent complete as of Sunday, compared to the five-year average of 65 per cent, were also supportive.
However, forecasts are calling for good weather this week in the US Midwest, which will help harvest move along at a good pace. The US crop is also still expected to be record large.
WHEAT futures were higher, with Minneapolis, Kansas and Chicago contracts ending four to nine cents per bushel stronger on Tuesday.
Values were lifted by concerns about slow harvest progress in the US Midwest reducing the amount of acres planted to soft red winter wheat.
Further support came from the weaker US dollar index, as it could spark fresh export demand for US wheat supplies, analysts said.
Chart-based buying and news of unfavourable conditions in Russia and Australia were also supportive, though the large global supply situation continued to overhang the market.
• Winter wheat planting in the US was 84 per cent complete as of Sunday, up from 76 per cent last week, and right in line with the average pace, the USDA said in their weekly crop report.
• According to reports, Australia’s wheat crop was downgraded to around 22 to 23 million tonnes, from last month’s estimate of just over 24 million tonnes due to unfavourable dry weather.
• Taiwan reportedly purchased 41,250 tonnes of milling wheat from the United States.
