By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
Winnipeg, July 17 – ICE Futures Canada canola contracts were stronger on Friday, seeing a corrective bounce ahead of the weekend after posting losses every other day of the week.
Follow-through speculative selling took the November contract as low as C$512.10 per tonne at one point during the session, but the market managed to uncover some support at that level and turned around as the longer-range trend remains pointed higher.
Expectations that canola production will still be down considerably on the year, despite recent rainfall in parts of Western Canada, added to the eventual buying interest as any moisture was generally seen as ‘too little too late’ in many cases.
Read Also
Canadian Financial Close: Loonie, crude oil rise higher
Glacier FarmMedia – The Canadian dollar maintained its positive momentum on Monday, aided by gains in crude oil and despite a…
Ongoing weakness in the Canadian dollar, which dropped to its lowest levels in six years relative to its US counterpart, helped underpin canola as well, said traders. Gains in CBOT soyoil futures were another supportive influence, although soybeans were down on the day.
About 13,976 canola contracts were traded on Friday, which compares with Thursday when 15,715 contracts changed hands.
Milling wheat, durum, and barley were all untraded.
CBOT SOYBEAN futures were two to seven cents US per bushel lower on Friday, as the funds were liquidating their positions ahead of the weekend, brokers said.
Forecasts calling for drier weather in the US Midwest over the weekend were also bearish, as it could lead to more seeded acres of soybeans than expected.
Worries about strong competition from South America on the export market weighed on values as well. Though, strength in soyoil limited the declines.
The market also ran into support when the November contract tested the US$10.00 per bushel level, analysts said.
SOYOIL futures ended stronger, seeing an upward correction after recent losses.
SOYMEAL futures closed lower, undermined by profit taking on recent gains was also bearish, participants said.
Corn contracts in Chicago finished five to 10 cents US per bushel weaker Friday, undermined by forecasts calling for more beneficial dry weather next week in the US Midwest.
The sell-off was also linked to traders shedding their long positions amid a lack of fresh bullish news, according to analysts.
Further downward pressure came from signs of slowing demand from China, and the domestic ethanol industry – as ethanol crush margins are at four-month lows.
WHEAT futures at the Chicago Board of Trade closed five to eight cents lower on Friday, reacting to continued strength in the US dollar index.
A lack of fresh export demand for the US wheat crop added to the bearish tone, as did pressure from the advancing harvests in the US and Europe.
Improving growing conditions in for wheat crops in Western Canada were also weighing on values, brokers said.
• There are rumours floating around that Mexico is going to purchase wheat from France to replace wheat from the US because French prices are more attractive.
• Reports say Algeria issued a tender to buy 250,000 metric tons of milling wheat for delivery in October from an optional origin.
• The European Union wheat crop is holding up better than expected as harvest moves along, officials say.
Settlement prices are in Canadian dollars per metric tonne.
