By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service
Winnipeg, June 4 – ICE Futures Canada canola contracts were stronger on Thursday, testing new highs as speculative buying interest and ongoing concerns over the state of the Canadian crop provided support.
While there was no real fresh fundamental news, canola continued to find some support from the ongoing production uncertainty. Market participants are still trying to get a handle on just how much area was lost following recent frosts, with some traders estimating that actual canola area may be down by a million acres or more from earlier estimates. A lack of moisture in some parts of the Prairies was another supportive feature, with yields likely to be hurt if there is not a rain soon.
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Gains in CBOT soybeans provided some spillover support for canola as well, although soyoil was lower.
The recent strength in canola was generating some farmer selling, which tempered the upside potential. However, most growers are reluctant to sell for now, as they wait to get a better sense on just how much canola they will have to market this year.
About 25,988 canola contracts were traded on Thursday, which compares with Wednesday when 38,324 contracts changed hands. Spreading accounted for 15,698 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CBOT SOYBEAN futures were eight to 11 cents US per bushel stronger on Thursday. The gains were linked to short covering, traders said.
Concerns about rain causing planting delays in parts of the US Midwest this week were also supportive.
Improving crush margins for domestic processors added to the bullish tone.
Though, the large global oilseed supply situation and strong competition from South America continued to overhang the market.
SOYOIL futures were weaker, seeing a profit taking correction following Wednesday’s rally, analysts said.
SOYMEAL futures were stronger on Thursday, taking some direction from the gains in soybeans.
CORN futures in Chicago finished three to five cents per bushel higher on Thursday, following the gains seen in wheat, traders said.
Talk that rain in the US Midwest could reduce US corn acreage, as farmers may not be able to get into the fields in time to finish the last bit of planting.
Signs of improving demand from the domestic ethanol industry were also bullish.
Though, large global supplies and disappointing weekly export sales data from the USDA limited the gains. Old crop sales totalled 464,900 metric tons, with cancellations of 54,200 tons for new crop.
CBOT, MGEX and Kansas City wheat futures closed 12 to 15 cents US per bushel higher, seeing some continued short covering on recent declines.
Further support came from forecasts calling for rain in the US central Plains, as it could cause disease problems and reduce the quality of wheat crops that will be harvested soon.
Concerns about dryness curbing production in Europe, Russia and Canada further underpinned values.
Though, global supplies of wheat remain large, which limited the gains, as did disappointing weekly export sales data from the USDA.
Old crop sales saw cancellations of 20,400 metric tons, with 364,100 tons of new crop sold during the week.
• China’s Ministry of Agriculture said wheat production should outpace last year’s 4.64 billion bushels, due to higher yields amid good growing conditions.
• There are worries that Germany will have less milling wheat quality wheat to export as regulations are set to be put in place later this year to limit nitrogen applications.
• Global wheat production is now pegged at 723 million metric tons by the U.N.’s Food and Agriculture Organization, an increase of 4.3 million tons from their previous estimate.
Settlement prices are in Canadian dollars per metric ton.
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