North America Grain/Oilseed Review: Canola down after choppy day

By Phil Franz-Warkentin, Commodity News Service Canada

April 21, 2015

Winnipeg – ICE Futures Canada canola contracts were weaker on Tuesday, with speculative positioning a feature of the thin and choppy activity.

Bearish technical signals and spillover from the losses in CBOT soybeans contributed to the softer tone in canola, according to participants.

However, the outright trade was relatively directionless for the majority of the session, and intermonth spreading accounted for most of the activity in the market.

A lack of significant farmer selling, the need to keep some weather premiums in the futures ahead of spring seeding, gains in CBOT soyoil, and a weaker tone in the Canadian dollar all helped to underpin the futures, according to participants.

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About 24,240 canola contracts were traded on Tuesday, which compares with Monday when 26,570 contracts changed hands. Spreading accounted for 18,780 of the contracts traded.

Milling wheat, durum, and barley were all untraded.

SOYBEAN futures at the Chicago Board of Trade were down by one to three cents per bushel on Tuesday, as the market was said to be due for a correction from a chart standpoint after prices hit their highest levels in two weeks on Monday.
Mounting concerns over avian influenza in the Midwest added to the softer tone in soybeans, as the disease outbreak will likely cut into the demand for soymeal.

The large South American crops remained a bearish influence as well, according to participants. However, there was also renewed talk about a possible truckers strike in Brazil circulating the market.

SOYOIL settled with small gains on Tuesday, as advances in Malaysian palm oil provided some support. Spreading against soymeal was another feature.

SOYMEAL futures were down on Tuesday, amid concerns over declining demand from the poultry sector.

CORN futures in Chicago were down by three to five cents per bushel on Tuesday, despite a slow start to spring seeding this year. The bird flu concerns that weighed on soybeans were also a factor in the corn pit.

This year’s US corn crop was 9% seeded as of this past Sunday, according to the weekly USDA report. The progress was running slightly behind the five year average of 13%, which was somewhat supportive for the futures.
However, the nearby weather forecasts look favourable and ideas that farmers will be able to catch up over the next few weeks kept on prices overall.

WHEAT futures in Chicago were up one to two cents per bushel on Tuesday. Chart based speculative buying was a feature, as wheat continued to see a bit of a bounce off of the lows hit last week.
Poorer than expected condition ratings for the US winter wheat crop did provide some support as well. The overall crop was left unchanged at 42% rated good to excellent in the weekly report, and some key states saw conditions decline slightly.
However, spring wheat plantings were running well ahead of normal for this time of year with 36% of intended acres already in the ground. The five-year average is just under 20% seeded.

Settlement prices are in Canadian dollars per metric ton.