By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
March 14, 2014
Winnipeg – ICE Futures Canada canola contracts settled at their highest levels in three months, as supportive technical signals had fund traders covering short positions and putting on new longs ahead of the weekend.
Commercial demand also provided some support, as the ongoing logistics problems in Western Canada are starting to show signs of clearing up, according to participants.
A weaker tone in the Canadian dollar, a lack of significant farmer selling, thin volumes, and spreading against the declining US soybean market was also supportive, said a broker.
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While the losses posted in the CBOT soy complex did serve to temper the gains in canola, the Canadian oilseed also remains underpriced compared to soybeans, said traders.
About 12,173 canola contracts were traded on Friday, which compares with Thursday when 20,564 contracts changed hands. Spreading accounted for 9,312 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Thursday’s close.
SOYBEAN futures closed four to eight US cents a bushel lower on Friday, amid concerns that China will cancel some orders of US soybeans.
Worries about Chinese cancellations came from reports that their ports are full and concerns about slow economic growth in the country.
Reports of good movement of soybeans out of Brazil further undermined values, as did commercial and speculative based selling.
However, ongoing worries about the tight old crop supply situation in the US helped to temper the declines, traders said.
SOYOIL futures were 53 to 70 points lower, following the declines seen in outside vegetable oil markets, including Malaysian palm oil, brokers said. Follow-through selling on Thursday’s declines added to the bearish tone.
SOYMEAL futures closed US$0.10 to US$2.10 higher, amid follow-through buying on Thursday’s gains. Spreading against soyoil was also supportive, traders said.
CORN futures in Chicago settled one to four cents US a bushel stronger Friday, finding spillover support from the advances seen in wheat, participants said.
Continued good demand for US corn supplies and nervousness about the political turmoil between Ukraine and Russia were also bullish.
However, the large US supply situation and spillover pressure from the weakness in soybeans tempered the gains.
WHEAT futures in the US were stronger Friday, as short covering ahead of the weekend was supportive, analysts said. The buying was sparked by concerns about the vote in Crimea this weekend, which will determine if the region will remain part of Ukraine, or join Russia.
Chicago, Kansas City and Minneapolis futures finished nine to 15 US cents a bushel higher.
Ongoing worries about dry weather reducing yield potential for winter wheat crops in parts of the US Plains added to the bullish tone, as did continued good demand for US supplies.
However, the large global supply situation continued to overhang the market.
• India’s government will begin procuring wheat from the Punjab region on April 15, hoping to buy 3.5 to 4 million tonnes from farmers, the country’s Food Secretary said.
• Russian wheat prices have risen over the past two weeks and exporters in the country aim to replace slowing exports out of Ukraine, analyst SovEcon said.
• According to traders, Morocco purchased about 400,000 tonnes of milling wheat from multiple origins, including Russia and Ukraine.
Settlement prices are in Canadian dollars per metric ton.
