North American Grain/Oilseed Review: Canola/Soybeans Close Higher

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Published: December 22, 2014

By Phil Franz-Warkentin, Commodity News Service Canada

December 22, 2014

Winnipeg – ICE Futures Canada canola contracts were higher on Monday, as chart-based buying and spillover from the advances in CBOT soybeans provided support.

Fund traders adding to long positions were a feature, as prices tested nearby resistance.

Weakness in the Canadian dollar contributed to the gains in canola. The Canadian currency traded below 86 US cents, which was supportive for crush margins and also makes exports more attractive.

On the other side, the strength in canola was thought to be encouraging some light farmer selling which did temper the advances. However, most producers remain on the sidelines for the time being as they await the New Year.

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The relatively favourable South American crop prospects, large US soybean stocks, and continued weakness in crude oil put some pressure on canola values as well.

About 25,362 canola contracts were traded on Monday, which compares with Friday when 20,770 contracts changed hands. Spreading accounted for 13,378 of the contracts traded.

Milling wheat, durum, and barley were all untraded.

SOYBEAN futures at the Chicago Board of Trade were up by 6 to 8 cents per bushel on Monday, recovering from early losses as chart-based buying provided support and speculators squared positions ahead of Christmas and the New Year.

Soybeans had started the day on the defensive, as favourable weather conditions in South America over the weekend weighed on values.

However, some chart support was uncovered to the downside and values managed to bounce higher as the day progressed. Better-than-expected weekly export inspections added to the firmer tone.

News that China would officially allow imports of a genetically modified soybean variety developed by DuPont contributed to the eventual gains in beans, according to participants.

SOYOIL futures were narrowly mixed on Monday. The gains in soybeans were somewhat supportive, while losses in crude oil and other outside vegetable oil markets put some pressure on values.

SOYMEAL futures were up on Monday.

CORN futures in Chicago settled within a penny of either side of unchanged after trading within a narrow range throughout the session.

Corn started the day lower, but eventually moved up with soybeans. The good South American crop weather was a bearish influence overhanging the market, while the large US supply situation and losses in crude oil also weighed on values.

However, good export demand supported corn, and helped prices edge higher. The USDA reported fresh export business this morning of 167,000 tonnes of US corn to unknown destinations to be delivered during the current marketing year.

WHEAT futures in Chicago were down by 3 to 7 cents per bushel, retreating from early advances as the market ran into upside resistance.

Uncertainty over Russian exports remained at the forefront of the wheat market, with news coming over the weekend that the country was considering putting export duties in place in an attempt to slow exports and keep a lid on domestic prices.

However, Russia has already moved roughly three quarters of its expected wheat exports for the marketing year, lessening the impact of the latest news on the market. Ample world wheat supplies also remain a bearish influence in the background.

– Egypt bought 240,000 tonnes of French wheat and an additional 60,000 tonnes from Russia in its latest tender over the weekend.

– In light of recent developments at mending relationships between Cuba and the US, the US Wheat Associates say Cuba could be in the market to import at least 500,000 tonnes of US wheat each year. The country has not bought any US wheat since 2011.

Settlement prices are in Canadian dollars per metric ton.

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