By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
May 12, 2015
Winnipeg – ICE Futures Canada canola contracts were down sharply at Tuesday’s close, as bearish soybean supply projections from the USDA spilled over to weigh on values.
The USDA released its monthly crop report earlier in the day, with both the soybean production and ending stocks projections coming in above trade guesses.
The Canadian dollar was also up by two thirds of a cent relative to its US counterpart, which put some added pressure on canola, according to participants. The stronger currency cuts into crush margins and makes exports less attractive to international buyers.
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On the other side, concerns over possible frost damage to some early seeded canola crops were somewhat supportive. A general lack of farmer selling, together with some modest bargain-hunting at the lows, helped limit the losses as well.
About 15,287 canola contracts were traded on Tuesday, which compares with Monday when 16,659 contracts changed hands.
Milling wheat, durum, and barley were all untraded.
CBOT soybean futures dropped 16 to 19 cents US per bushel lower on Tuesday, reacting to a bearish monthly USDA supply and demand report, analysts said.
The USDA pegged US soybean production at 3.85 billion bushels for 2015/16, slightly above estimates of 3.83 million. The 2015/16 US ending stocks figure was 500 million bushels, above average guesses of 438 million.
Large crop prospects in South America also led to larger than expected world stockpiles for 2015/16. The USDA pegged 2015/16 world ending supplies at 96.2 million metric tons, above expectations of 95.0 million.
Though, a decline in ending stocks estimates for both the world and US in 2014/15 tempered the downside in soybeans. The USDA pegged 2014/15 ending stocks at 350 million bushels in the US, below guesses of 363 million.
Global ending stocks for 2014/15 were estimated at 85.5 million metric tons, compared with expectations of 89.7 million.
SOYOIL futures moved lower Tuesday, following the weakness in soybeans, traders said.
SOYMEAL futures also softened Tuesday, reacting to the bearish USDA report figures, brokers noted.
CORN futures in Chicago finished little changed, with values steady to three-quarters of a cent higher at the close.
Some support came from signs of improving export demand for US corn, as the USDA increased their corn export estimate for 2014/15 to 1.825 billion bushels, from 1.800 billion last month.
Though, 2015/16 US production was pegged at 13.63 billion bushels in the report, which was above guesses of 13.55 billion. US corn production totalled 14.22 billion bushels in 2014/15.
The USDA also pegged global ending stocks for the current crop year, and next, at larger than expected figures. Though, US stockpiles were generally in line with expectations.
WHEAT futures at the Chicago Board of Trade closed steady as well, with futures unchanged to half a cent lower on Tuesday. Minneapolis spring wheat and Kansas City futures finished steady to two cents lower.
Some support came from the USDA report, as it indicated human consumption of wheat is increasing, meaning global demand is expected to rise in the coming years.
Worries about cold weather, frost and excess rain damaging some US spring and winter wheat crops were also underpinning prices.
Though, the USDA report also showed larger than expected global and US ending stocks, which was bearish. US stockpiles at the end of 2014/15 were pegged at 709 million bushels, above pre-report guesses of 689 million. The following crop year’s ending stocks in the US were at 793 million bushels, while traders anticipated 727 million.
World stockpiles should total 201.0 million metric tons at the end of 2014/15, and 203.3 million for 2015/16. Pre-report guesses came in at 197.4 million tons for 2014/15, and 194.2 million for 2015/16.
• According to reports, Russia is planning to remove its current grain export by the middle of May. The tax was implemented in February to help curb inflating domestic prices.
• South Korea is looking to purchase 20,000 tonnes of feed wheat.
• As of May 10, US winter wheat conditions were rated as 44 per cent good to excellent, up one percentage point from the week prior, according to the USDA. Though, 20 per cent of the crop was in poor to very poor condition, unchanged from the week before.
Settlement prices are in Canadian dollars per metric ton.
