By Dave Sims and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, January 6 – The ICE Futures Canada canola market chopped around both sides of unchanged for much of the day before finishing higher Wednesday, drawing strength from the Canadian currency.
Good exports, slow farmer selling and steady buying from funds underpinned the market.
Strength in CBOT soybeans lent support to canola along with higher Malaysian palm oil prices.
The Canadian dollar was trading near 12-year lows relative to its US counterpart which made canola more attractive to foreign buyers and improved domestic crush margins.
However, losses in crude oil and European rapeseed futures limited the gains.
Improvements to soybean crops in Brazil and Argentina were bearish for canola, according to a report.
If the near-term contract breaks below US$475 per tonne range the selling could build on itself, an analyst said.
Investors are keenly waiting for the release of the USDA quarterly stocks report which is due on January 12.
Around 22,490 canola contracts were traded on Wednesday, which compares with Tuesday when around 18,488 contracts changed hands. Spreading accounted for about 13,898 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade were up by three to eight cents per bushel on Wednesday, recovering from earlier declines by the close as speculative short-covering came forward to provide support.
Soybeans hit their lowest levels in more than six weeks at one point, but support held to the downside and helped trigger the eventual short-covering correction.
Positioning ahead of next week’s USDA crop reports contributed to the choppy tone in soybeans, according to participants.
Forecasts for improving weather conditions in South America tempered gains. Concerns over Chinese demand going forward also limited advances.
SOYOIL settled near unchanged on Wednesday, as spillover from the advances in soybeans was countered by the losses in the outside energy markets.
SOYMEAL futures were up on Wednesday, following soybeans.
CORN futures in Chicago settled within a half cent of unchanged on Wednesday, seeing some stability at the close after hitting fresh contract lows earlier in the day.
Speculative short covering was a feature in corn, as traders were busy squaring positions ahead of the January 12 USDA reports.
However, any advances were tempered by a lack of significant end-user demand, with declines in crude oil cutting into the interest from the ethanol sector.
WHEAT futures in Chicago were up by one to two cents per bushel on Wednesday, also seeing a corrective bounce after hitting fresh lows earlier in the day.
Ideas that poor weather conditions in some winter wheat growing regions of the US contributed to the firmer tone. However, the strengthening US dollar and ongoing poor export demand did limit the upside potential.
The overall technical trend also remains pointed lower for wheat, according to analysts.
– The European Union granted export licenses for 337,000 tonnes of wheat during the week ended December 29, according to reports. Total export licenses during the crop-year-to-date come in at 12.4 million tonnes.
– Roughly 80% of Argentina’s wheat stocks are reported to be below milling quality, which could create some opportunities for North American exports.
Futures Prices as of January 6, 2016
Prices are in Canadian dollars per metric ton