By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
May 23, 2014
Winnipeg – ICE Futures Canada canola contracts settled lower on Friday, as speculative selling and good planting weather across the Prairies weighed on values ahead of the weekend.
After cool and wet weather had raised concerns over seeding delays in eastern parts of the Prairies recently, the conditions are turning hot and dry which should allow producers to make some good seeding progress, said participants.
The large old crop canola supplies overhanging the market, losses in CBOT soyoil, and the firmer Canadian dollar, also weighed on values.
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On the other side, scale down end user demand was said to be providing some underlying support. A lack of significant farmer selling, as producers remain busy with spring field work, helped limit the losses as well.
US markets will be closed Monday, May 26, for Memorial Day, while Canadian markets will remain open. Positioning ahead of the US long weekend kept some caution in the futures.
About 19,249 canola contracts were traded on Friday, which compares with Thursday when 16,452 contracts changed hands. The July/November spread trade was a feature of the activity.
Milling wheat, durum and barley futures were untraded, although wheat saw some price adjustments following the close.
SOYBEAN futures at the Chicago Board of Trade closed two to five cents US per bushel lower on Friday, seeing a profit taking correction following recent gains and ahead of the long weekend, analysts said. US markets will be closed for Memorial Day on Monday, May 26.
Ideas that the 2014/15 US soybean crop will be very large, as good soil moisture conditions are already getting it off to a good start, further undermined values.
Reports that more soybeans from South America are moving into the US were also behind the price softness, as was good weather forecasts for planting in the US this weekend.
However, ongoing worries about the tight old crop supply situation in the US amid steady demand tempered the declines.
SOYOIL futures were weaker, following the declines seen in outside vegetable oil markets, industry watchers said. Profit taking at the highs of the day was also bearish.
SOYMEAL futures closed narrowly mixed on Friday, as traders were evening positions ahead of the long weekend in the US, according to brokers.
CORN futures in Chicago settled one to three cents a bushel higher after a day of choppy activity as traders were being cautious ahead of the Memorial Day long weekend.
Sentiment that the market is oversold and due for an upward correction provided some support for prices, as did steady demand for the commodity, analysts said.
On the other side, expectations that farmers will have 85 to 90 per cent of the US corn crop planted by Sunday, May 25, were bearish.
Beneficial soil moisture conditions in the US that will help corn crops get off to a good start also weighed on values.
WHEAT futures were weaker, with Chicago, Minneapolis and Kansas City futures seeing losses of two to eight cents US per bushel.
Values were undermined by forecasts calling for a significant amount of rainfall across the US winter wheat belt over the weekend.
Forecasts calling for dry weather, that will aid planting in the northern United States over the weekend, were also bearish, traders said.
The large global supply situation continued to overhang the market, as did signs of slowing demand for US wheat.
However, sentiment that the market is oversold helped to limit the declines.
• China has reached an agreement to purchase 100,000 tonnes of wheat for the 2014/15 crop year from Kazakhstan. Last year, Kazakhstan sold 10,000 tonnes of wheat to China.
• The Indian government has procured 266.68 lakh tonnes so far this marketing year (Apr/Mar), up from 247.80 lakh tonnes at the same point last year.
• Turkey’s statistics office estimated the wheat crop would produce 19.8 million tonnes, down 10 per cent from the year prior due to drought conditions.
Settlement prices are in Canadian dollars per metric ton.
