North American Grain/Oilseed Review: Canola up with weaker C$

By Phil Franz-Warkentin, Commodity News Service Canada

January 22, 2015

Winnipeg – ICE Futures Canada canola contracts were higher on Thursday, as the weaker Canadian dollar supported crush margins and also made exports more attractive.

After dropping sharply on Wednesday, the Canadian dollar continued to weaken relative to its US counterpart on Thursday.

Speculators adding to their large net long positions, estimated at over 35,000 contracts, accounted for much of the buying interest, according to traders. Nearby chart signals also remain pointed higher.

On the other side, losses in CBOT soyoil and soybeans weighed on values. Scale up farmer selling also came forward to put some pressure on the market.

North American Grain/Oilseed Review: Canola rises, down day for grains

Glacier FarmMedia | MarketsFarm – Canola futures on the Intercontinental Exchange were higher on Friday despite weakness in most comparable…

However, a broker cautioned that many line companies were switching to the lower-priced May futures, from the nearby March contract, in their basis contracts. May canola settled at a discount of $8.80 per bushel compared to the front month.

About 27,245 canola contracts were traded on Thursday, which compares with Wednesday when 36,881 contracts changed hands. Spreading accounted for 15,806 of the contracts traded.

Milling wheat, durum, and barley were all untraded.

SOYBEAN futures at the Chicago Board of Trade were down four to six cents per bushel on Thursday, with favourable South American crop prospects behind some of the weakness.

Forecasts calling for some timely rains in Brazil over the next week accounted for some of the selling pressure in bean, as the prospects of a large South American soybean crop are already cutting into the demand for US supplies, according to participants.
China in particular will likely be cancelling more purchases, as the cheaper South American soybeans become available.
Losses in crude oil and outside vegetable oil markets also weighed on prices today.

SOYOIL futures were down on Thursday, as losses in crude oil and Malaysian palm oil weighed on values.

SOYMEAL futures were only slightly lower on Thursday, lagging the rest of the soy complex to the downside as the product spreads saw some adjustments.

CORN futures in Chicago were down one to four cents per bushel on Thursday.

Large US corn supplies that have still been un-priced by farmers were overhanging the market, while demand from exporters and the livestock sector was also thought to be backing away on the other side.
Losses in crude oil and the resulting weakness in ethanol were also bearish for corn, said traders.
A report from the International Grains Council added to the softer tone, as the group raised its forecast for world corn production in the current crop year by 10 million tonnes, to 992 million. Total world grain production was pegged at just over 2 billion tonnes, which would be a new record.

WHEAT futures in Chicago settled were down two to three cents per bushel in the most active months after trading to both sides of unchanged in choppy activity. Minneapolis and Kansas City wheat contracts posted larger declines, losing three to seven cents per bushel.
Speculative short covering had provided some early support for wheat, but the large world grain supplies did weigh on values.
Ideas that the weakening Canadian dollar will lead to more Canadian wheat moving into the US, and possible reductions in US export opportunities as the US currency strengthens internationally, also weighed on prices, said participants.
On the other side, the renewed tensions in Ukraine and weather issues in some winter wheat growing regions of the world were supportive.

Settlement prices are in Canadian dollars per metric ton.