By Dave Sims and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, September 27 – THE ICE Futures Canada canola market finished slightly lower on Tuesday due to speculative trade.
Losses in Malaysian palm oil added to the downside.
Hedge pressure was a main feature of the day according to a trader in Winnipeg.
“The market is drifting to the downside, spreads are widening out; a signal that maybe we’re rebuilding the pipeline out there,” he said, adding that yields could be better than expected despite recent rains.
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Funds will likely continue to cover themselves to the short side, added the trader.
“They’re only short 15,000 to 20,000 (contracts) so they’ve really brought that number way down. That may not be the supportive factor it once was,” he said.
However gains in US soybeans limited the losses.
Wet weather on the Canadian Prairies was supportive.
The open interest on the charts continues to build and commercials are likely looking to snap up any of the short contracts that the funds had, said the trader.
Around 12,168 canola contracts were traded on Tuesday, which compares with Monday when around 15,261 contracts changed hands. Spreading accounted for about 6,130 of the contracts traded.
Milling wheat and durum were untraded and 200 barley contracts changed hands.
Settlement prices are in Canadian dollars per metric tonne.
SOYBEAN futures at the Chicago Board of Trade were up by seven to eight cents per bushel on Tuesday, as harvest delays in parts of the Midwest provided support.
The US soybean harvest was 10 per cent complete as of this past Sunday, according to the latest USDA report. That was slightly below trade estimates and the average for this time of year.
While the longer range forecasts are looking drier, many areas remain waterlogged by recent precipitation. Overland flooding was also a problem in some regions.
SOYOIL futures were unchanged at Tuesday’s close, after trading to both sides of unchanged throughout the session.
SOYMEAL futures were up on Tuesday, taking some direction from the advances in soybeans.
CORN futures in Chicago were up by two to three cents per bushel on Tuesday, as the market saw a modest recovery following Monday’s sharp losses.
The US corn harvest was 15 per cent complete as of this past Sunday, which was off the 19 per cent average for this time of year. Heavy precipitations in recent days also caused harvest delays for corn.
A number of locks along the Mississippi were shut down due to flooding, hampering grain movement along the key transportation corridor.
WHEAT futures in Chicago were up by five to eight cents per bushel, recovering all of Monday’s losses.
Solid recent export demand provided underlying support, although ample world supplies remain a bearish influence.
The US winter wheat crop was 30 per cent seeded as of this past Sunday, which is in line with the five-year average, according to the USDA data.
– Dry conditions in Russia are raising concerns over winter wheat crops in the country, according to a report from the European Commission.
