By Dave Sims, Commodity News Service Canada
Winnipeg, July 24 – THE ICE Futures Canada canola market chopped lower Friday, taking direction from the US soy complex.
Large funds bailed out of long positions after values triggered technical indicators during their descent.
European rapeseed futures were lower, which added to the declines, while large supplies of soybeans on the world market were bearish for canola values.
However, the Canadian dollar was weaker against its American counterpart, which made canola more attractive to international buyers.
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Recent rain across parts of the Canadian Prairies have helped to ease drought concerns in various areas.
Producers are holding onto supplies right now which helped to limit the losses, according to a trader.
“With the dollar so weak, everyone knows producers aren’t selling, so some guys have to buy futures right now to cover sales,” he said.
CWB (formerly known as the Canadian Wheat Board) has pegged Canada’s 2015/16 canola production at 12.5 million tonnes. This is much lower than an earlier estimate by the Canadian government but slightly above CWB’s previous estimate of 12.2 million tonnes.
Around 22,363 canola contracts were traded on Friday, which compares with Thursday when around 12,755 contracts changed hands. Spreading accounted for 8,340 of the contracts traded.
Milling wheat, barley and durum were all untraded.
Settlement prices are in Canadian dollars per metric ton.
SOYBEAN futures at the Chicago Board of Trade were down by 12 to 19 cents per bushel on Friday, hitting their lowest levels in a month as improving Midwestern weather conditions and bearish technical signals weighed on values.
The futures fell below some major chart points during the week, which triggered some additional speculative selling ahead of the weekend.
Ideas that Chinese demand would be backing away over the next few months, as the country is believed to be well covered for the time being, added to the softer tone.
SOYOIL and SOYMEAL settled lower on Friday.
CORN futures in Chicago were down by seven to 11 cents per bushel on Friday, as the good US crop conditions weighed on values.
Midwestern weather conditions are looking close to ideal as the corn crop goes through its key pollination stage, and traders are generally expecting to see improvements in the USDA ratings next week.
The move below US$4.00 per bushel in the nearby September contract was also bearish from a technical standpoint, which contributed to the declines.
WHEAT futures in Chicago were seven to 10 cents per bushel lower on Friday, as US farmers continue to make good progress harvesting this year’s winter wheat crop.
Chart-based selling added to the softer tone, while recent strength in the US dollar was also bearish as US wheat remains expensive internationally.
– Results of the CWB crop tour of Western Canada pegged the country’s wheat crop at 23.1 million tonnes, which was up from an earlier estimate but still well below the 27.2 million tonnes grown the previous year.
