By Phil Franz-Warkentin, Commodity News Service Canada
Feb. 24, 2014
Winnipeg – ICE Futures Canada canola contracts were weaker on Monday, retreating from earlier advances as the market ran into resistance to the upside.
Advances in CBOT soybeans and soymeal initially spilled over to help the canola market see some early strength, according to participants. The fact that canola remains cheap compared to most outside oilseed markets helped underpin the Canadian futures as well.
However, the overall technical trend remains pointed lower, which made the early gains a good selling opportunity from a chart standpoint, according to traders.
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The ongoing logistics issues across Western Canada remain a bearish influence overhanging the futures as well. In addition, a firmer tone in the Canadian dollar also weighed on prices.
About 22,419 canola contracts were traded on Monday, which compares with Friday when 33,942 contracts changed hands. Spreading accounted for 17,906 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Friday’s close.
SOYBEAN futures at the Chicago Board of Trade settled at their highest levels in five months on Monday, up 5 to 15 cents per bushel, as mounting concerns over the production prospects in South America provided support.
Hot and dry growing conditions earlier this month are thought to have lowered the yield potential in Brazil and Argentina. While there was some rain over the weekend, industry participants were generally of the opinion that the moisture was not enough at this stage to help the crop and actually caused harvest delays in some cases.
Political issues hampering farmer deliveries and the crush pace in Argentina were also supportive, especially for soymeal, as problems there were causing more soymeal buyers to turn to the US.
SOYOIL futures were down on Monday, with losses in outside vegetable oil markets and spreading against soymeal weighing on prices.
SOYMEAL futures were higher on Monday, boosted by good demand and the production issues in Argentina.
CORN futures in Chicago settled narrowly mixed within a penny or two of unchanged, after trading around both sides of unchanged in choppy activity.
Supply/demand estimates released by the USDA last week remained a bearish influence, with record yield prospects and expectations for a large US carryout weighing on values.
WHEAT futures were stronger on Monday, Chicago, Kansas City and Minneapolis futures all up as much as 12 cents per bushel as chart-based buying and Midwestern weather concerns provided some support.
Cold temperatures are being forecast across much of the Midwest over the next week, which could lead to downgrades or winterkill to the wheat crops there.
– India will export 18 million tonnes of wheat and rice in 2013/14, said a government official. That would compare with combined exports of the two grains of 20 million tonnes the previous year.
– Canadian farmers will plant 23.3 million acres of wheat in 2014, down 10% from the previous year, said analyst Jon Driedger, of FarmLink Marketing Solutions, at the Grainworld conference in Winnipeg.
