By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
March 18, 2015
Winnipeg – ICE Futures Canada canola contracts were stronger at Wednesday’s close, taking some direction from a rally in CBOT soybeans and soyoil.
Activity was thin and choppy throughout the day, with the light volumes and a lack of significant farmer selling on the other side exaggerating the move higher, according to participants.
Solid commercial demand remained a supportive factor in canola, although the Canadian oilseed is starting to look a bit more expensive compared to other options, said a broker.
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A stronger tone in the Canadian dollar and the large South American soybean crop also put some pressure on values.
About 16,153 canola contracts were traded on Wednesday, which compares with Tuesday when 13,405 contracts changed hands. Spreading accounted for 9,138 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CBOT soybean futures ended eight to 11 cents US per bushel higher on Wednesday, lifted by short covering following Tuesday’s sharp declines, analysts said.
A late session sell-off in the US dollar, after the US Federal Reserve said they will wait to see more improvement in the labour market before raising interest rates, was also supportive.
However, signs of slowing export demand for US soybeans and reports of good yields for the South American crop limited the gains.
Expectations that farmers in the US will plant a record large amount of soybeans this spring also put downward pressure on values.
SOYOIL futures were up sharply on Wednesday, underpinned by sentiment that the market was oversold. Further spillover support came from the gains seen in Malaysian palm oil, brokers said.
SOYMEAL futures were also stronger, following the advances seen in soybeans.
CORN futures in Chicago finished steady to four cents US per bushel higher Wednesday, finding some spillover support from the gains seen in wheat and soybeans, participants said.
Short covering following Tuesday’s more than two per cent drop added to the bullish tone, as did weakness in the US dollar index.
Expectations that US farmers will seed fewer corn acres this spring also underpinned values.
However, the large global supply situation and signs that export demand for US corn is slowing were bearish.
CBOT, Minneapolis and Kansas City wheat futures ended seven to 10 cents US per bushel higher Wednesday, reacting to the softening US dollar index, as it makes US wheat less expensive to foreign buyers.
Traders are optimistic that the weaker US dollar paired with a recent decline in US wheat prices will attract fresh export demand.
Worries about dry weather harming some US winter wheat crops was also supportive. Though, forecasts are calling for beneficial rain in the Southern US Plains later this week.
The large global supply situation was also overhanging the market, according to industry watchers.
• Nonghyup Feed, a South Korean company, purchased 53,000 metric tonnes of feed wheat for delivery by September. The origin is optional, reports say.
• Zambia’s government said it is lifting a current ban on wheat imports in order to avoid a shortage of the commodity. They’ve also eliminated a 15 per cent duty on wheat imports.
• Indian state Maharashtra is extending a tax exemption on essential commodities, including wheat in the 2015/16 budget, according to reports.
Settlement prices are in Canadian dollars per metric ton.
