By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
April 22, 2014
Winnipeg – ICE Futures Canada canola contracts settled with large declines on Tuesday, seeing some follow-through selling after Monday’s turn lower.
Declines in the CBOT soy complex spilled over to weigh on canola, accounting for some of the weakness in the Canadian market. Speculators were noted sellers, with some sell stops hit as prices dropped below nearby support, according to participants.
Farmer hedges weighed on prices as well, as producers look to make some sales ahead of spring seeding. Ideas that the highs may be in for the time being contributed to that selling pressure, especially as large old crop supplies continue to overhang the market and early expectations are for an increase in canola acres this year.
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On the other side, oversold price sentiment and ideas that canola is still cheap compared to other oilseeds were somewhat supportive.
About 34,401 canola contracts were traded on Tuesday, which compares with Monday when 28,659 contracts changed hands. Spreading was a feature, accounting for 22,732 of the contracts traded.
Milling wheat, durum and barley futures were untraded, but saw some price revisions following the close.
SOYBEAN futures at the Chicago Board of Trade closed sharply lower for the second consecutive session Tuesday, seeing losses of five to 19 cents US a bushel.
Worries about possible Chinese cancellations of US and Brazilian soybeans were bearish.
Expectations that farmers in the US will seed more soybean acres this spring than last year also weighed on the market.
The possibility that farmers will plant even more soybeans than expected because the planting of corn has been delayed so far this spring, added to the bearish tone.
However, continued steady commercial demand and tight old crop supply worries in the US helped to limit the declines.
SOYOIL futures were lower, following the declines seen in soybeans, traders said.
SOYMEAL futures also moved lower amid worries about Chinese cancellations and spillover pressure from the weakness in soybeans.
CORN futures in Chicago settled five to eight cents a bushel higher on Tuesday, lifted by reports that planting progress of corn in the US has been very slow so far this spring, brokers said.
According to the USDA’s weekly crop progress report, about six per cent of the 2014 US corn crop was planted as of April 20, down from the five-year average of 14 per cent.
Forecasts calling for above normal amounts of precipitation in some areas of the US Midwest over the next week or two were also bullish, as that would keep farmers from planting. There are also some worries that some of the precipitation will be snow, which would negatively impact yield potential.
WHEAT futures in the US ended stronger, seeing an upward correction following the sharp declines seen on Monday, analysts said. Minneapolis, Kansas and Chicago futures settled one to eight cents US a bushel stronger.
The USDA’s weekly crop report, which showed the winter wheat conditions in the country continued to decline during the week ended April 20, was also bullish. Reports of slow planting of spring wheat in the US were also lifting the futures.
Uncertainty surrounding the political problems in Ukraine also continued to underpin the futures.
However, forecasts calling for beneficial weather for winter wheat crop development in the southern US Plains this week limited the gains, as did the large global supply situation.
– The USDA’s weekly crop report showed that 10 per cent of the 2014/15 spring wheat crop was planted as of April 20, up from 6 per cent a year ago, but below the five-year average of 16 per cent.
– The 2014/15 US winter wheat crop was 34 per cent in good to excellent condition as of April 20, unchanged from the week prior and down from 35 per cent in 2013, the USDA said.
– Farmers in Russia planted 11.5 per cent of their spring crops as of April 21, 2014. About 281,000 hectares of spring wheat were planted, the government said.
Settlement prices are in Canadian dollars per metric ton.
