By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
Feb. 13, 2014
Winnipeg – ICE Futures Canada canola contracts settled sharply weaker on Thursday, setting fresh lows once again as speculators continued to add to their large short positions and some stops were hit on the move below psychological support.
The nearby March contract fell below C$400 per tonne, which was bearish from a chart standpoint, according to participants.
Much of the activity was said to be tied to speculators selling canola and buying other commodities. The CBOT soy complex was higher, causing the spread between canola and soybeans to widen to record levels.
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Poor end user demand contributed to the declines, as the ongoing logistics issues across the Prairies have limited the ability of end users to actually follow through on purchases.
Oversold price sentiment did provide some support.
About 71,237 canola contracts were traded on Thursday, which compares with Wednesday when 35,378 contracts changed hands. Spreading accounted for 69,352 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Wednesday’s close.
SOYBEAN futures closed 12 to 21 US cents per bushel higher on Thursday, as worries about tight US supplies fuelled some of the advances, analysts said.
Spreading against canola, as traders were buying soybeans and selling canola futures, also helped to generate some of the upward price action.
Reports that US exporters have more soybeans in 2013/14 (Sept/Aug) already than the USDA originally forecast for the entire year were also bullish.
However, disappointing weekly export sales data for the week ending February 6 limited the gains. The USDA reported export sales of 296,200 tonnes for delivery in 2013/14 and 2014/15.
Expectations of a large South American soybean crop, as weather is expected to improve over the weekend, were also bearish.
SOYOIL futures were 23 to 57 points higher, as positive weekly export sales data and spillover from soybeans lifted values, brokers said.
SOYMEAL futures closed US$5.20 to US$9.30 higher, recovering from recent losses. Strong demand for the commodity helped to lift values, traders added.
CORN futures were one-and-a-half US cents lower to half a cent higher Thursday after a day of choppy two-sided activity.
Positive weekly export sales data, which showed sales of 1.27 million tonnes of US corn during the week ended February 6, were supportive.
Reports of strong demand from the ethanol sector also supported the market.
On the other side, expectations of large corn crops from Ukraine and South America were bearish, as were ideas that US supplies are ample.
WHEAT futures in the US were mostly higher, with all three markets posting gains of five to 10 cents US per bushel.
Strong export demand for US wheat, as confirmed by positive weekly export sales data from the USDA, was bullish, analysts said.
Worries about unfavourable weather hitting US winter wheat growing regions over the weekend also fuelled some of the gains.
However, the large global supply situation continued to overhang the market, limiting the upside.
• FranceAgriMer, France’s farm office, estimated exports out of the country to total 11.5 million tonnes in 2013/14 (June/May), unchanged from their previous estimate.
• The USDA reported 626,600 tonnes of wheat were sold for export during the week ended February 6. The top buyers were Japan, Nigeria and Mexico.
• The UK imported 163,602 tonnes of wheat during December 2013, customs data from the region showed.
Settlement prices are in Canadian dollars per metric ton.
