By Phil Franz-Warkentin and Dave Sims, Commodity News Service Canada
May 7, 2014
Winnipeg – ICE Futures Canada canola contracts settled with small gains in most months on Wednesday, recovering from earlier declines in the final minutes of the session.
Losses in the CBOT soy complex, bearish technical signals, and the burdensome supply situation in Western Canada, all weighed on canola throughout the day, according to participants.
However, canola managed to turn higher by the close as farmer selling dried up and steady commercial buying interest provided support, said a trader.
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Mounting concerns over the lateness of spring seeding underpinned the futures as well, with cool and wet conditions continuing to cause delays across much of Western Canada.
About 8,297 canola contracts were traded on Wednesday, which compares with Tuesday when 13,517 contracts changed hands. Spreading accounted for 3,808 of the contracts traded.
Milling wheat, durum and barley futures were untraded and unchanged, after seeing some price revisions following Tuesday’s close.
SOYBEAN futures at the Chicago Board of Trade dropped seven to 13 cents per bushel Wednesday, on slowing demand from China and expectations of soon-to-arrive imports from Brazil.
China is expected to post a third consecutive monthly decline in soy imports, said analysts.
While just two boats have been confirmed as having being loaded with soybeans from Brazil, traders have been influenced by rumours more are on the way, said Terry Reilly of Futures International LLC in Chicago.
A new survey forecasts US soybean stockpiles to rise to 80.9 million metric tonnes at the end of the 2014-15 season. That is up 68.7 million tonnes from the year-earlier.
The investment funds for soybeans and corn are “incredibly long” right now, according to Reilly.
SOYOIL futures were lower on Wednesday following soybeans.
SOYMEAL futures were also down.
WHEAT futures in Chicago drifted one to two cents lower Wednesday, as traders took profits following a surge on Tuesday that saw prices jump to a 13-month high.
Support is still being found in drought conditions afflicting Kansas, Oklahoma and Texas and a technical breakout to the upside in the July contract, said an analyst.
The looming release of the USDA’s supply/demand report could cause traders to pull back in the next few days, said Reilly.
CORN futures in Chicago fell two to three cents lower as warm, dry weather across the US Midwest allowed growers to get some seeds into the field. Storms are expected later this week.
Cool, wet weather in the Midwest has made it tough for some farmers to plant seeds on schedule.
Planting beyond the middle of May might not be as detrimental as normal due to the expected arrival of El Nino by mid-summer, according to a report.
– Wheat values remain strong heading into the USDA report on Friday. One of the key drivers is the money being found in commodities as a hedge against the geo-political uncertainty in the Black Sea region, said an analyst.
– Germany’s cash wheat premiums have been weakened due to low buying interest, said an analyst.
– The US wheat market remains uncompetitive in world export markets after the recent futures rally, according to analysts at CHS Hedging.
Settlement prices are in Canadian dollars per metric ton.
