By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service
June 2, 2015
Winnipeg – ICE Futures Canada canola contracts were lower at Tuesday’s close, backing away from earlier gains as the market ran into some resistance to the upside.
Both old and new crop canola contracts had traded within three dollars of the psychological C$500 per tonne mark at one point during the day, but gave up all of their gains as chart based profit taking and an increase in farmer selling eventually came forward to weigh on prices.
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Sharp strength in the Canadian dollar, which was up over three-quarters of a cent relative to its US counterpart, contributed to the eventual weakness in canola, according to participants.
However, concerns over recent frost damage in the eastern Prairies, together with persistent dryness issues in Alberta and Saskatchewan, did remain supportive. Gains in CBOT soybeans also helped limit the losses in canola.
About 45,255 canola contracts were traded on Tuesday, which compares with Monday when 57,097 contracts changed hands. Spreading accounted for 28,670 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CBOT SOYBEAN futures were 14 to 16 cents stronger on Tuesday, seeing a short covering correction following recent sharp losses, analysts said.
Late Monday’s USDA crop report was also supportive, as it showed 71 per cent of the crop was seeded as of Sunday, below expectations that 75 per cent would be in the ground.
Worries that rain will cause seeding delays for US soybean farmers later this week further underpinned values.
The advances were also linked to worries about adverse weather lowering crop prospects for Canadian canola and Malaysian palm oil, brokers added.
Though, the large global soybean supply situation and strong competition from South America limited the gains.
SOYOIL futures were softer on Tuesday, seeing a profit taking correction following recent sharp advances, traders said.
SOYMEAL futures were stronger, lifted by short covering after seeing sharp losses Monday. Spreading against soyoil was also a feature.
CORN futures in Chicago finished five to seven cents a bushel higher, following the gains seen in wheat and soybeans, market watchers said.
Concerns that it may be too wet to plant the last few acres of corn in certain regions of the US added to the bullish tone.
However, the USDA pegged seeding at 95 per cent complete as of Sunday, which was bearish, as was their crop condition rating of 74 per cent good to excellent.
CBOT, Kansas City and Minneapolis wheat futures closed 17 to 23 cents higher on Tuesday, underpinned by continued short covering after a recent drop in values, traders said.
A weaker tone in the US dollar index was also bullish, as it made US wheat more attractive to foreign buyers.
Further support came from declining crop conditions in the US, as the USDA said the winter wheat crop was 44 per cent good to excellent as of Sunday, down from 45 per cent the week prior.
However, the large global supply situation and a continued lack of fresh demand news for US wheat supplies tempered the advances.
• Farmers in Egypt sold more of their wheat production to the government this year because of bread subsidies, resulting in fewer imports of the grain.
• Wheat procurement in India has increased by two per cent during the current marketing year so far, according to official data.
• International buyers are rejecting Danish wheat, and opting to purchase from other European countries instead, as protein content in Danish wheat recently dropped to the lowest ever, a Danish research institute reports.
Settlement prices are in Canadian dollars per metric ton.
