By Phil Franz-Warkentin and Dave Sims, Commodity News Service Canada
June 4, 2014
Winnipeg – ICE Futures Canada canola contracts were stronger on Wednesday, seeing a corrective bounce off of nearby lows.
After hitting their softest levels in three months yesterday, canola futures were looking oversold and due for a correction from a chart standpoint, according to participants.
End user demand was also supportive, with domestic crushers said to be taking advantage of the recent losses to make some purchases.
Gains in CBOT soyoil and the weaker Canadian dollar contributed to the gains as well, said traders.
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However, the large old crop supply situation, relatively favourable weather conditions for crop development across North America, and the longer range technical charts that are still pointing lower, did temper the advances.
About 24,294 canola contracts were traded on Wednesday, which compares with Tuesday when 23,768 contracts changed hands.
Milling wheat, durum and barley futures were untraded and unchanged, after seeing some price revisions following Tuesday’s close.
SOYBEAN futures at the Chicago Board of Trade were mixed on Wednesday as near-term crops strengthened on technicals while the more-deferred positions stayed bearish on improved prospects for recently emerged crops.
USDA Soybean exports were 43.7 million bushels in April, down from 116 million March but still a better pace than expected with last April doing 35 million, according to a report.
It’s expected some growers in the US will shift their crops out of corn and into soybeans but it is expected to be in relatively minor amounts, an analyst said.
SOYOIL futures were up sharply on Wednesday.
SOYMEAL futures was lower following soybeans, with spreading against soyoil another feature.
CORN futures in Chicago dipped one to two cents per bushel lower Wednesday as it’s unclear what damage crops may have incurred from storms that passed through the Corn Belt earlier in the week. Crop development has been slow, meaning only early planted corn may have seen damage.
Ethanol margins are good but speculation abounds that futures will drop, according to a report. The weekly EIA numbers listed ethanol production 1.19% higher on the week while stocks were 4.35% higher. Gasoline demand was off 2 percentage points.
The basis has been steady or firm to start the week.
WHEAT futures in Chicago ended one to two cents per bushel higher Wednesday and three to five cents per bushel higher in Kansas City on technical buying brought on by low prices.
The modest jump broke a 10-session losing streak and brought prices out of their lowest price point since February 28. Improving moisture conditions in the US Southern Plains and rising world production have contributed to the overall bearish conditions.
Despite the advance, today’s momentum could be short-lived as one analyst believes the short-term technical play, was brought on by a relatively small number of traders.
– Wheat-growing regions in Australia are set for a drier winter amid a looming El Nino event, which can bring below-average rain to the country’s east and south, according to the country’s Bureau of Meteorology.
– Indonesia has bought around 125000 tonnes of wheat from Russia at USD 290-295/tonne) for shipment between mid-July and mid-August. That compares with a price of $305 being quoted for Indian wheat for the same period of time.
– In its latest monthly report, German grain trader Toepfer International said good wheat harvests were expected in most areas of Europe, supporting the US Department of Agriculture’s view of a global crop of 697 million tonnes.
Settlement prices are in Canadian dollars per metric ton.
