By Phil Franz-Warkentin and Marney Blunt, Commodity News Service Canada
August 15, 2014
Winnipeg – ICE Futures Canada canola were weaker on Friday, but managed to settle well off the contract lows hit during the session as some profit-taking came forward late in the day.
Losses in the outside vegetable oil markets, including CBOT soyoil and Malaysian palm oil, contributed to the bearish tone in canola, according to participants. The soft vegoil markets are cutting into Canadian crush margins, making canola seed not as attractively priced as it once was.
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Some sell stops were likely hit on the way down, contributing to the declines, although canola did manage to find some support at the lows.
A lack of significant farmer selling given the continued uncertainty over the size of the Canadian crop also helped limit the losses. Dryness concerns across much of the Prairies were also supportive, although a trader noted that it is starting to get too late for canola to see any benefit from more moisture at this stage of development.
About 18,944 canola contracts were traded on Friday, which compares with Thursday when 18,784 contracts changed hands. Spreading accounted for 5,464 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
SOYBEAN futures in Chicago closed mixed on Friday amid bearish weather and strong demand news, analysts say.
The market is currently seeing strong demand, however the bearish weather conditions are benefiting the crop and increases the prospect for a higher yield ahead.
Forecasts show another round of showers for Iowa by Sunday and into Monday, which are expected to be approximately half an inch to one inch. Temperatures in the U.S. Midwest are expected to heat up, sparking some showers in the northern Plains, central Midwest and in the eastern Corn Belt. Overall, there is no bullish weather conditions forecast in key growing areas for the next week to ten days, traders say.
Global equity markets took on a higher track overnight and earlier in the day, helped by easing geopolitical concerns and prospects for more active central bank support.
SOYOIL futures in Chicago were lower on Friday.
SOYMEAL futures closed higher on Friday, keeping the spread with soybean oil.
CORN futures in Chicago were higher on Friday amid slightly better technical action and good export data that kept the bulls active, brokers say.
News is relatively quiet, although weather forecasts suggest the last stages of crop maturity will see favourable conditions. The same rain showers in the northern Plains, central Midwest and eastern Corn Belt that benefit the soybean crops will also benefit the corn crops.
There’s still more talk that ear weights and plant populations suggest a higher yield in the September USDA report but over the short-term, traders will keep an eye on the ProFarmer crop tour next week. The tour will spread across the Corn Belt and provide detailed views of the crop with a tour yield estimate at the end of the tour.
WHEAT futures in Chicago were higher on Friday as continued rainfall in parts of Europe will further delay the harvest and reduce crop quality, which may drive buyers to the U.S., traders say.
Parts of northern and central Europe are expected to receive more than half an inch of rain on Friday and Saturday. Scattered showers are forecast for the regions of central Europe, forecasters say.
There are beneficial rain showers forecast for eastern Australia over the next three to seven says, with additional precipitation moving into Western Australia. There appears to be nothing in the forecast to suggest major deviation from the U.S. Department of Agriculture (USDA) productions estimate of 26 million tonnes for Australia, which is down one million from a year ago. This would be the fifth largest harvest since 1984.
• Food grain production in India during the year that ended in June has been revised marginally higher to a record of 264.77 million tonnes on the back of an all-time high wheat and rice output. Wheat production was revised to 95.91 million tonnes.
• The European Union has awarded licences to import 239,940 tonnes of Ukrainian wheat under a duty-free quota created this year as part of a trade deal between the bloc and the Ukraine president.
• The Russian wheat crop will be a lower quality due to depressed protein levels. Reports say that 57 per cent of the Russian wheat is showing significant quality issues.
Settlement prices are in Canadian dollars per metric ton.
