By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
February 5, 2015
Winnipeg – ICE Futures Canada canola contracts were stronger on Thursday, as a rally in palm oil pulled most other vegetable oil markets up as well.
Malaysian palm oil posted its largest single-day advance in over four years as Indonesia announced plans to raise subsidies on the production of biodiesel. With CBOT soyoil also posting big gains, canola followed along. Strength in crude oil also provided some support, according to participants.
Commercials and speculators were both noted buyers, although volumes were on the thin side.
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The Canadian dollar was also sharply stronger on Thursday, which tempered the upside potential in canola as the firmer currency makes exports less attractive. Scale up farmer hedges also came forward to limit the gains, said traders.
About 14,890 canola contracts were traded on Thursday, which compares with Wednesday when 15,644 contracts changed hands. Spreading accounted for 10,450 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CBOT SOYBEAN futures ended five to 10 cents US per bushel higher on Thursday, finding spillover support from outside oilseed markets, such as palm oil and soyoil, analysts said.
Malaysian palm oil values led the way higher for global oilseed markets, including soybeans, after Indonesia announced they will raise subsidies on biodiesel production.
Short covering following Wednesday’s declines further underpinned soybean values, as did weakness in the US dollar index.
The USDA said 496,700 tonnes of soybeans were sold for export during the week, which was at the higher end of expectations.
However, generally good weather for South America’s soybean crop, which is projected to be record large, limited the gains.
SOYOIL futures were up sharply, following Malaysian palm oil prices after Indonesia announced subsidy increases for biodiesel production, traders said.
SOYMEAL futures were softer, seeing some follow-through selling on Wednesday’s losses. Spreading against soyoil was also a feature of the activity, brokers noted.
CORN futures in Chicago finished one to two cents US per bushel higher Thursday, following the advances seen in Chicago soybean and wheat futures.
A rebound in crude oil prices and a weakening US dollar index were behind the upward price movement, according to participants.
However, the large global supply situation was limiting the upside, as was cautiousness ahead of next Tuesday’s monthly USDA supply and demand.
USDA weekly export sales of 852,000 tonnes came in at the low end of expectations.
WHEAT futures in the US ended sharply higher, with Chicago, Minneapolis and Kansas City futures seeing gains of eight to 15 cents US per bushel.
A weakening US dollar index and strengthening crude oil market were also bullish for wheat prices, industry watchers said.
Optimism that Egypt may place an order for US wheat supplies in the near future added to the stronger tone, as did worries about unfavourable weather hurting some US winter wheat crops.
However, lacklustre weekly export sales, which the USDA said totalled 487,000 tonnes, limited the upside. The large global supply situation was also overhanging values.
• About 20 per cent of Russia’s winter crops are rated as being in “bad” condition, according to APK-Inform, a Russian agriculture consulting firm.
• The Punjab government in India announced it will export surplus reserves of wheat. The country’s federal office also said they will allow wheat exports with a rebate of 50 dollars per metric ton.
• Ukraine exported 21.885 million tonnes of grains between the beginning of the 2014/15 crop year and February 5, the country’s government said.
Settlement prices are in Canadian dollars per metric ton.
