By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
Feb. 11, 2014
Winnipeg – ICE Futures Canada canola contracts settled at fresh contract lows on Tuesday, as chart-based selling and hedge pressure weighed on values.
With both speculators and farmers still on the sell side, end users on the other side remained content to watch prices drift lower given the ongoing logistics issues that continue to slow movement of Canada’s record large crop, said traders.
Cash flow needs were behind the continued farmer selling, as canola is still providing the best returns for producers despite the ongoing weakness, according to a broker.
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However, gains in CBOT soybeans and soyoil did provide some underlying support.
Oversold price sentiment and ideas that canola is cheap compared to most other oilseeds helped limit the losses as well.
About 26,259 canola contracts were traded on Tuesday, which compares with Monday when 27,819 contracts changed hands. Spreading accounted for 21,564 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Monday’s close.
SOYBEAN futures closed four to nine US cents per bushel higher on Tuesday amid easing concerns about China cancelling previously made US soybean orders, traders said.
Worries that recent dry weather in Brazil may have damaged some soybean crops also helped fuel some of the advances, as did continued strong export demand.
However, forecasts calling for beneficial rain in dry areas of Brazil later this week and Monday’s higher than expected US ending stocks estimate from the USDA limited the gains.
SOYOIL futures were 10 to 17 points higher following the advances seen in Chicago soybeans and Malaysian palm oil futures, brokers said.
SOYMEAL futures closed US$1.90 to US$5.20 higher Tuesday, recovering from Monday’s declines. Strong demand for the commodity was bullish, participants added.
CORN futures were one to three US cents weaker Tuesday, undermined by ideas that demand for US supplies is decreasing due to recent higher prices, analysts said.
Reports of improving weather conditions for the development of Argentina’s corn crop also put downward pressure on the market.
Ideas that corn supplies in the US are ample, despite a lower than expected carryout stocks figure in Monday’s USDA report, added to the bearish tone.
However, estimates calling for a smaller than first anticipated Argentine corn crop, due to recent dry weather, limited the losses.
WHEAT futures in the US moved higher on Monday, with Minneapolis, Kansas City and Chicago prices closing with gains between two and 10 cents US per bushel.
Continued support for wheat futures came from Monday’s bullish USDA report. The government agency reported stronger than expected export demand, resulting in smaller US ending stocks for wheat.
Concerns about cold weather damaging US winter wheat crops in some isolated areas were also supportive, though snow cover is adequate in many regions.
The large global supply situation also continued to overhang the market, which limited the advances, analysts said.
• The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimated the country will produce 27 million tonnes of wheat in 2013/14, up from their previous forecast of 26.2 million.
• According to Egypt’s supplies minister, the country has enough stocks of wheat to last them until June 15, 2014. The minister added that Egypt is aiming to increase their storage capacity to 6 million tonnes by mid-2015, from the current 1.5 million tonne capacity.
Settlement prices are in Canadian dollars per metric ton.
