By Phil Franz-Warkentin and Dave Sims, Commodity News Service Canada
March 28, 2014
Winnipeg – ICE Futures Canada canola contracts settled near their lows of the day on Friday, as the market corrected lower after posting gains for most of the past week.
Farmer selling pressure contributed to the losses, as many producers are still sitting on unsold canola they need to price ahead of spring seeding, said traders.
The expectations for a record large canola carryout also remained bearish, although ideas that the logistics problems across the Prairies were starting to show some improvement did provide some support. The Canadian government introduced legislation on Thursday that is intended to help improve grain movement going forward.
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Canadian canola remains cheap compared to other oilseeds, which encouraged some end user demand. A weaker tone in the Canadian dollar was also supportive.
The CBOT soy complex provided little direction for canola, with soybeans settling near unchanged. The USDA releases a pair of stocks and acreage reports on Monday, March 31, and the potential for a volatile reaction to the numbers kept the US markets on the subdued side on Friday.
About 20,203 canola contracts were traded on Friday, which compares with Thursday when 17,361 contracts changed hands. Spreading accounted for 15,542 of the contracts traded.
Milling wheat, durum and barley futures were untraded and unchanged, after seeing some price revisions following Thursday’s close.
WHEAT futures in Chicago fell 15 cents a bushel on Friday while contracts in Kansas City fell between 15 to 20 cents as traders sought to place bets ahead of the release of a major USDA report.
On Monday the USDA will unveil the 2014 Spring Planting Intentions report, which surveyed 80,000 US farmers, as well as the quarterly grain stocks estimates.
Grain companies, farmers and speculators took positions in case prices shoot higher while other bought contracts fearing a price-drop.
Recent forecasts of rain in the US Grain Belt have caused more uncertainty in the market, an analyst said.
CORN futures in Chicago rose slightly on Friday with some deferred contracts rising three cents a bushel. The highly anticipated USDA report saw prices move up and down in a narrow margin on Friday.
The CBOT Corn Volatility Index climbed above 34 on Friday, its highest level since late November.
Analysts expect the USDA report to predict corn planting acreage to shrink from 95.365 million acres last year, to 92.902 million acres this year.
SOYBEAN futures at the Chicago Board of Trade were largely unchanged on Friday, as the lead-up to release of the USDA report on Monday sparked subdued trading in a tight range.
There is speculation the report will highlight a rise in the number of soybean acres that are expected to be planted.
Weak export sales and an expectation that more supplies are coming from Brazil and Canada pressured the market.
Brazilian and Chinese suppliers are rumoured to be looking for more US customers to accept supplies.
SOYOIL futures ended slightly higher on Friday with positioning ahead of Monday’s report.
SOYMEAL futures ended two dollars lower on Friday, seeing a correction after hitting nearby highs on Thursday.
– Brazillian flour mills are shifting away from Argentina supplies in favour of US imports
– Wheat prices in Russia show no sign of slowing down after rising for the fourth consecutive week. Turmoil in Ukraine is blamed for the surge.
– South African wheat futures fell to their lowest level in two weeks due to a rise in the rand against the dollar.
Settlement prices are in Canadian dollars per metric ton.
