By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
April 23, 2014
Winnipeg – ICE Futures Canada canola contracts settled lower on Wednesday, as bearish technical signals and the resulting speculative selling sent prices to their lowest levels in a month.
The large losses posted earlier this week did some damage from a chart standpoint, shifting the general bias lower for canola, according to a trader. Fund traders were noted sellers, with some stops hit on the way down.
Positioning ahead of Thursday’s Statistics Canada planting intentions report was also behind some of the weakness, with market participants generally anticipating a 5% to 10% increase in canola acreage compared to the 19.9 million acres seeded last year.
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On the other side, canola does remain cheap compared to CBOT soybeans, and oversold price sentiment provided some underlying support. The need to keep some weather premiums in place ahead of spring seeding helped temper the declines as well.
About 37,723 canola contracts were traded on Wednesday, which compares with Tuesday when 34,401 contracts changed hands. Spreading was a feature, accounting for 28,038 of the contracts traded.
Milling wheat, durum and barley futures were untraded and unchanged, after seeing some price revisions following Tuesday’s close.
SOYBEAN futures at the Chicago Board of Trade closed mixed, with the two nearby contracts experiencing the only losses. Prices were anywhere from 11 cents US a bushel lower to 16 cents higher. The narrowing in of the old crop/new crop spread was behind the mixed activity, said analysts.
Old crop values moved lower with commercial selling, as well as reports of more South American soybeans being imported into the US. Worries about Chinese cancellations were also bearish.
New crop futures were stronger, as recent losses were seen as overdone and due for an upward correction. Expectations of strong Chinese demand for new crop going forward were also bullish.
SOYOIL futures were lower, undermined by spillover pressure from the declines seen in Malaysian palm oil futures, brokers said.
SOYMEAL futures closed mixed, following the same price action seen in soybeans, traders said.
CORN futures in Chicago settled six to nine cents US a bushel higher on Wednesday, as continued worries about recent wet weather slowing US corn planting progress were supportive.
Chart-based buying and concerns that cold temperatures expected in some parts of the US Midwest this week will reduce yield potential for corn were also bullish.
However, a lack of fresh demand news and ideas that farmers will be able to plant a lot of corn next week, as weather is expected to improve, limited the gains, analysts said.
WHEAT futures in the US ended stronger, following the gains seen in corn. Minneapolis, Kansas and Chicago futures settled one to six cents US a bushel stronger.
Uncertainty surrounding how much damage has been done to US winter wheat crops by recent unfavourable weather in the southern US Plains continued to underpin the market, as did reports of spring wheat planting delays in the US.
Ongoing worries about political problems in Ukraine were also supportive.
However, forecasts calling for improving conditions for winter wheat crop development in the US Plains, as well as the planting of spring wheat this week, limited the gains.
• Iran was reported as buying 60,000 tonnes of wheat from Russia recently, according to Russian firm SovEcon.
• Prices for wheat in Ukraine have reached record highs due to the political turmoil in the region, according tp the Ukrainian Club of Agrarian Business.
• India will likely miss its targets of wheat procurement for 2014/15, and import less than the 25 million tonnes seen last year, the government reported.
Settlement prices are in Canadian dollars per metric ton.
