By Phil Franz-Warkentin and Marney Blunt, Commodity News Service Canada
August 22, 2014
Winnipeg – ICE Futures Canada canola settled at fresh lows for the third straight session on Friday, as an early corrective bounce proved short-lived.
While CBOT soybeans settled higher, fund traders liquidating long canola positions and covering shorts in CBOT soybeans accounted for some of the relative weakness in the Canadian oilseed, according to a broker.
Bearish chart signals and losses in CBOT soyoil added to the softer tone in canola, according to participants.
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However, Canada’s smaller canola crop and the need to keep some weather premiums in the futures ahead of the harvest did help temper the declines. Temperatures dipped near the freezing mark in parts of northern Alberta overnight, while rainfall in southern Manitoba and Saskatchewan was not really needed at this late stage of development.
About 8,508 canola contracts were traded on Friday, which compares with Thursday when 14,354 contracts changed hands. Spreading accounted for 5,276 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
SOYBEAN futures for delivery before the autumn harvest rose for the sixth straight session as processors were scrambling to secure tight supplies to ensure they have enough to last until the beginning of harvest in the southern states, analysts said.
U.S. stockpiles at the end of the 2013/14 season that ends on August 31 are expected to drop to 140 million bushels as consumption outpaced production. This is the lowest level in five years, according to the U.S. Department of Agriculture (USDA).
This year’s U.S. soybean crop is forecast at a record 3.82 billion bushels, which will more than triple inventories by this time next year.
Some soybean processors are seeking supplies to last until the harvest, however most are trying to buy only what they need to get through the next few weeks.
SOYOIL futures in Chicago closed lower on Friday, keeping the spread with soymeal.
SOYMEAL futures closed higher on Friday, with gains in soybeans providing some support.
WHEAT futures in Chicago were higher on Friday following Thursday’s report from Statistics Canada which said that output would total 27.7 million metric tonnes, well below expectations and well below last year’s record production, brokers say.
Spread trade continues to firm between contract months and classes of wheat, which is an encouraging demand sign with reports of imports by European countries to make up quality deficits, traders say.
The spring wheat harvest is expected to continue along at a slow pace and traders will be keeping their eyes on the geopolitical tensions between Russia and Ukraine, both countries are large exporters of wheat.
• France’s rain-drenched wheat crop has deliver the first shock of the 2014/15 season as the EU’s top growers and exported is buying Lithuanian and British milling wheat to mix with its unusually poor-grade crop to meet contracts signed before the harvest.
• Japan’s Ministry of Agriculture said it received no offers of feed-quality wheat or barley in a simultaneous buy and sell auction that closed this week. The ministry had sought 120,000 tonnes of feed wheat and 200,00 tonnes of feed barley to be loaded by November 28 or arriving in Japan by January 15, 2015.
CORN futures in Chicago gained on Friday after the ProFarmer crop tour forecast yields below the projections from the USDA, traders say.
Reports say that the tour found good yields overall, however some were slightly under the USDA estimates. The yields in Iowa, the biggest corn producing state in the U.S., were pegged at 178.75 bushels per acre, below the USDA’s outlooks of 185 bushels per acre.
Old crop corn continues to benefit the new crop bulls by a modest degree as the market approaches harvest, traders say.
Basis levels have generally firmed up this week with end-users working to step up coverage, according to analysts.
Settlement prices are in Canadian dollars per metric ton.
