By Terryn Shiells and Dave Sims, Commodity News Service Canada
WINNIPEG, Sept. 9 – ICE Futures Canada canola contracts fell along with Chicago soybean futures on Tuesday, as the November CBOT contract tested key support levels, analysts said.
Positive weekly crop conditions ratings and expectations that the USDA will increase their soybean production estimates in Thursday’s monthly USDA report pushed soybeans, and canola, lower.
Canola futures were also reacting to spillover pressure from the weakness seen in Chicago soyoil, Malaysian palm oil and European rapeseed futures.
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However, worries about recent frost, snow and cool weather damaging Prairie canola crops were bullish. Forecasts are calling for more unfavourable cold conditions across Western Canada this week.
The downswing in the value of the Canadian dollar, which dropped below 91 cents US, was also supportive, as it made canola more attractive to crushers and exporters.
Activity was on the quiet side on Tuesday. Only about 8,412 contracts traded on Tuesday, which compares with Monday when 10,905 contracts changed hands.
Milling wheat, durum and barley futures were untraded. Though, the Exchange adjusted milling wheat and durum prices following Tuesday’s close.
SOYBEAN futures at the Chicago Board of Trade dropped 14 to 17 cents per bushel Tuesday, pulled lower by a generally favourable USDA crop condition report, and ideas of increased supplies from Brazil.
The November contract broke below the psychologically important US$10.00 level.
Seventy-two percent of the US soybean crop is rated as good or excellent. That is consistent with past surveys and reinforces ideas of a looming, massive harvest.
Brazil is expected to produce 86.1 million metric tonnes of soybeans in the current season. That compares to 85.7 million tonnes in a previous estimate.
The USDA is reporting that private exporters sold 120,000 metric tonnes of soybeans for delivery to unknown destinations. The sale was made within the last few days for the 2014/15 marketing year.
SOYOIL futures were lower on Tuesday, following declines seen in Malaysian palm oil futures overnight.
SOYMEAL futures also settled lower, following soybeans.
CORN futures in Chicago settled four cents per bushel lower Tuesday as the USDA released its weekly survey showing 74 percent of the US corn crop was in good or excellent condition.
The outlook was consistent with previous forecasts, which have all pointed towards a record harvest.
Concerns that frost could damage corn crops in the US Midwest have generally eased which has been bearish for prices, according to a report. One exception though is western Nebraska which carries a frost warning for Friday morning.
The USDA will likely peg corn production at 14.31 billion bushels in a report out on Thursday, according to a survey of analysts. That would be two percent higher than the August outlook for the crop.
Harvest efforts have begun over central Illinois.
WHEAT futures in Chicago ended six to seven cents per bushel lower on Tuesday, pressured by a USDA forecast calling for increased stockpiles of wheat at the end of the 2014/15 season.
The USDA said wheat stockpiles would likely total 664 million bushels, a mild increase from the previous estimate.
Weather conditions remain generally favourable across the US, which was bearish. US prices remain generally uncompetitive on the world stage, said participants.
• Britain’s wheat crop is set to become the largest in six years, according to a report. However, it will be a challenge to find buyers for the crop estimated at 16 to 17 million tonnes, say analysts.
• Russian wheat prices rose for the second straight week thanks to surging exports in the month of August, said an industry watcher.
• Kazakhstan has harvested 4.4 million tonnes of grain this season, according to a trader.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
