By Terryn Shiells and Dave Sims, Commodity News Service Canada
WINNIPEG, Jan. 28 – The ICE Futures Canada canola market ended sharply lower on Wednesday, as speculators began to liquidate their very large long position in the market, analysts said.
Spillover pressure also came from the weakness in Chicago soybean futures, and the large sell-off in soyoil values.
Increased farmer selling and the large Canadian canola supply situation further undermined the market.
Sentiment that canola is overvalued compared to other oilseeds added to the bearish tone, traders added.
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However, end user demand for canola remains steady, which helped to limit the declines.
The Canadian currency moved lower on Wednesday, which was also supportive as it made canola more attractive to crushers and exporters.
About 22,793 contracts changed hands on Wednesday, which compares with Tuesday when 18,253 contracts traded. Spreading accounted for 15,734 of the trades.
Durum and barley futures were all untraded and unchanged. Milling wheat futures were also untraded, though the Exchange moved prices lower after Wednesday’s close.
SOYBEAN futures in Chicago ended four to five cents per bushel lower Wednesday, amid ideas that more countries including China are turning to South America for soybeans, and not the US, analysts said.
Scattered rain forecasts in bean-growing regions of Brazil are expected to help improve moisture levels for dry plants. South American production is also expected to increase, which should be bearish for prices.
However, one trader said futures are enjoying some support from bargain-hunting at the lows.
SOYOIL futures ended 79 to 83 points lower, with spreading against soymeal a feature.
SOYMEAL futures ended higher on strong demand from domestic livestock producers.
CORN futures in Chicago finished eight to nine cents per bushel lower Wednesday, pressured by weak export demand for US corn supplies and a bearish outlook for corn-based ethanol.
A slump in crude oil prices has the potential to further cheapen gasoline making ethanol less desirable for consumers.
Argentina’s corn outlook is said to be promising which pressured values, as did spillover pressure from the large losses seen in wheat.
WHEAT futures in Chicago finished 13 to 14 cents per bushel lower Wednesday due to technical selling by large funds, according to a report. The March contract finished at its weakest point since Mid-October.
The strength of the US dollar continues to weigh on values as international buyers shop around for cheaper supplies. Ukraine has been especially persistent in its ability to undercut US bids, participants said.
• The gross grain harvest in Ukraine could increase by up to 20 percent if all producers used quality seeds, according to a report.
• Egypt has begun to accept more deliveries of French wheat and Romanian grain, participants said, showing it won’t simply look to the Black Sea region for its supplies.
• South Africa planted 1.2 percent less corn this year. Reports indicate farmers likely swapped out those acres in favour of wheat.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
