By Terryn Shiells and Brandon Logan, Commodity News Service Canada
Winnipeg, Jan. 24 – ICE Futures Canada canola contracts moved lower on Friday, as logistics problems moving the large Canadian crop continued to weigh on values. Because of the problems moving supplies, usage has been below expectations during the 2013/14 (Aug/Jul) crop year, analysts said.
Spillover pressure from the declines seen in Chicago soyoil and European rapeseed futures was also bearish.
The upswing in the value of the Canadian dollar further undermined values, as did a pick up in farmer selling in Western Canada.
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Reports of good weather and growing conditions for the large Brazilian soybean crop put additional downward pressure on canola.
However, sentiment that the market is oversold, and ideas that canola is undervalued compared to other oilseeds helped to limit the losses.
Some spillover support also came from the advances seen in Chicago soybean futures.
Activity was on the quiet side, as only about 18,928 canola contracts were traded on Friday, which compares with Thursday when 54,121 contracts changed hands. Spreading accounted for 16,358 of the trades.
Milling wheat, durum and barley futures were untraded.
Chicago Board of Trade (CBOT) Soybean futures closed six to seven US cents per bushel stronger on Friday, underpinned short covering following large losses earlier in the week, market watchers said.
Good demand for US soybeans was also supportive of prices. According to the USDA, export sales during the week ended January 16 totalled 706,400 tonnes, beating economists’ expectations.
Spillover from the gains seen in the soymeal market added to the bullish tone.
However, concerns that China could cancel US soybean purchases in the near-term and look to purchase Brazilian beans instead limited any further gains.
Soyoil futures closed 30 to 32 points weaker on Friday, undermined by spreading against soymeal, traders said.
Soymeal futures closed US$5.60 to US$7.00 higher on Friday, underpinned by spreading against soyoil, investors said.
Corn futures were less than a US cent per bushel higher on Friday, as ideas that farmers do not want to sell corn at current price levels, and are waiting for further gains in prices, were bullish, analysts said.
Further strength came from extremely poor weather conditions in the US, as cold temperatures, fresh snowfall, and strong winds have caused issues moving the grain off farms.
However, favourable weather for the development of the Argentinean corn crop limited any further gains, as did news that corn-based ethanol inventories are the highest they’ve been since July 19.
CBOT wheat, MGEX spring wheat AND KCBT red wheat futures closed four to five US cents per bushel weaker on Friday, undermined by profit taking following gains in recent sessions, industry watchers said.
With the US Midwest warming up on Friday, concerns that the US winter wheat crop could be damaged due to extremely cold temperatures subsided, brokers said.
Continued downward pressure also came from expectations of large global wheat carryover stocks.
• According to India’s Agriculture Ministry, wheat area for the ongoing rabi season is 31.4 million hectares, which compares to 29.6 million hectares during the same period last season.
• Japan’s farm ministry purchased 99,052 tonnes of US wheat.
• According to SovEcon, Russian wheat prices during the week ended January 24 were down slightly, following price increases seen the previous 11 weeks.
Canadian canola settlement prices are in Canadian dollars per metric ton.
