By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service
Winnipeg, July 16 – ICE Futures Canada canola contracts were down sharply on Thursday, settling at the bottom edge of their nearby trading range as Prairie crop conditions show some improvement and speculators continued to bail out of their large long positions.
While drought conditions in parts of Alberta and Saskatchewan remain supportive overall, recent weather has been more favourable to crop development helping alleviate some of the concerns for the time being, said traders. Expectations for good yields in Manitoba were also said to be bearish.
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Losses in CBOT soyoil and soybeans put further pressure on canola, although the Canadian market outpaced the US to the downside.
Weakness in the Canadian dollar did provide some support, which helped temper the losses as the softer currency encourages export demand and supports crush margins.
About 15,715 canola contracts were traded on Thursday, which compares with Wednesday when 20,202 contracts changed hands. Spreading accounted for 3,298 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CBOT SOYBEAN futures were three to six cents US per bushel lower on Thursday, reacting to forecasts calling for favourable warm, dry weather later this month, analysts said.
Concerns about strong competition on the export market from South America, especially at harvest time in the US this fall, added to the bearish tone.
The USDA said weekly export sales of soybeans totalled 45,500 metric tons for old crop, and 507,000 tons of new crop, which was generally in line with expectations.
However, reports that more precipitation fell on parts of the US Midwest this week than expected helped to limit the declines.
SOYOIL futures ended weaker, following the Malaysian palm oil market, which hit a one-week low overnight due to slowing demand, brokers said.
SOYMEAL futures closed mostly higher, as traders continued to play the spread between soyoil and soymeal, market watchers said.
Most corn contracts in Chicago finished within a cent of unchanged on Thursday, as traders are waiting for some fresh news to help provide direction for the market.
The arrival of unfavourable rain in the US Midwest this week was supportive, as was a pickup in buying by the funds, analysts said.
On the other side, forecasts calling for drier weather next week weighed on the market, as did the upswing in the value of the US dollar.
WHEAT futures at the Chicago Board of Trade closed three to five cents US per bushel lower, as the strong US dollar continued to slow export demand for US supplies.
The USDA said export sales of US wheat totalled 291,500 metric tons in this week’s report, falling below expectations of 300,000 to 500,000 tons.
Reports of improving conditions for European, Canadian and Russian crops further undermined values, as did forecasts calling for good harvesting weather this month.
However, oversold price sentiment and ongoing worries about lower quality in the US winter wheat crop limited the declines.
• The European Union’s soft wheat crop is expected to produce 140.9 million metric tons this year, down 0.7 million tons from a previous estimate, a report from Strategie Grains said.
• Japan made a purchase of wheat this week, with 75,600 metric tons of food quality from the US, 35,200 tons from Canada and 26,900 tons from Australia.
• According to a survey conducted by agricultural market research business KG2, farmers in the western regions of Australia are twice as likely to pool their grain as their eastern counterparts.
Settlement prices are in Canadian dollars per metric tonne.
