By Phil Franz-Warkentin and Dave Sims, Commodity News Service Canada
September 3, 2014
Winnipeg – ICE Futures Canada canola contracts were weaker on Wednesday, as selling in the CBOT soy market spilled over to weigh on prices.
The US soybean crop was rated 72% good-to-excellent in the latest weekly USDA report, which was an improvement of two points from the previous week and well ahead of historical averages for this time of year. The resulting losses in soybeans were more than enough to keep canola pointed lower as well, despite any concerns with the Canadian crop.
Read Also
Canadian Financial Close: Loonie returns above 72 U.S. cents
By Glen Hallick Glacier Farm Media | MarketsFarm – The Canadian dollar on Friday finally turned around to close higher,…
A firmer tone in the Canadian dollar, which increased by nearly half a cent relative to its US counterpart, was also bearish for canola, said participants.
However, forecasts calling for wet weather across much of
Western Canada over the next two weeks did limit the downside in canola, as the precipitation should delay harvest operations and could lead to some quality downgrades. The risk of frost is also increasing across the Prairies moving into September.
Technical support did hold to the downside, with some traders of the opinion that canola was starting to look oversold at current levels.
About 26,296 canola contracts were traded on Wednesday, which compares with Tuesday when 27,066 contracts changed hands.
Milling wheat, durum, and barley were all untraded.
WHEAT futures in Chicago dropped 13 to 19 cents per bushel on Wednesday, pulled lower in sympathy with plummeting corn prices, large global wheat supplies, and rumoured peace-talks between Russia and Ukraine.
Prices for Ukrainian and Russian wheat supplies, as well as some European countries, are much cheaper than US wheat, leading many buyers to ignore the US altogether, traders said.
There are reports China has significantly increased its wheat stocks this year, meaning it will be importing less wheat from other countries.
– Argentina could increase wheat exports by 20% if it eliminates export quotas, eases taxes and other policies that have slowed investment, analysts say.
– A lack of rain in Ukraine will delay the first half of the Winter-wheat planting campaign, according to a report.
– Japan has put out a tender for the purchase of 120 thousand tonnes of wheat and 200 thousand tonnes of feed wheat.
SOYBEAN futures at the Chicago Board of Trade fell 10 to 12 cents per bushel Wednesday, as the USDA upgraded the condition of the US crop in its weekly progress report. The USDA now says 72 percent of the soybean crop is good to excellent, up two percentage points from last week. The new designation reinforces ideas of a record, large harvest.
Some private brokerage firms also pegged their own yield and production estimates above what the USDA submitted, which added to the bearish tone.
Sean Lusk, the director of commercial hedging at Walsh Trading in Chicago, says some support exists at the technical barrier of C$10.00 per bushel for the November contract, but values could ultimately slide much lower.
China has indicated it will import 2.6 billion bushels of soybeans this year, which helped to limit the losses.
SOYOIL futures were slightly lower on Wednesday, in concert with Malaysian palm oil.
SOYMEAL futures fell on Wednesday following soybeans.
CORN futures in Chicago ended significantly lower on Wednesday, falling 10 to 11 cents per bushel. The decline occurred after the USDA upgraded the condition of this year’s crop in its weekly ratings report.
The USDA said 74% of US corn was in good or excellent condition as of Sunday; that is up one percentage point from the previous week. It also is much larger than last year’s rating at the same time of 59%.
Warm temperatures and timely rains across the US corn belt are aiding late-season development of the plants, say participants.
Despite on-going turmoil in the Black Sea region, exports of corn have moved freely which was bearish.
Settlement prices are in Canadian dollars per metric ton.
