By Dave Sims and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, May 22 – THE ICE Futures Canada canola market finished mixed Friday. The most-active July contract finished slightly higher due to a weak Canadian dollar as traders squared positions before the Memorial Day long weekend in the US. While US markets will be closed on Monday, Canadian markets will remain open. The weak Canadian dollar in relation to its US counterpart made canola more attractive on the international market.
However, the more deferred canola contracts finished slightly below unchanged in sympathy with losses in the US soy complex.
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Reports of frost over the weekend in various parts of Western Canada were bullish for values, while one trader said he thought dryness was starting to become a real problem.
“We are going to have to get some rain across half of the prairies in two to four weeks,” he said.
As well, recent estimates that the canola carryout in Canada will be significantly lower this year supported the market.
Farmer selling was sluggish as growers focus on seeding and fieldwork.
However, declines in the US soy complex limited the losses in canola.
As canola grows more expensive the chances of a downward
slide increases, said the trader.
Large world supplies of soybeans also cast a bearish
Around 17,354 canola contracts were traded on Friday, which compares with Thursday when 18,591 contracts changed hands. Spreading accounted for 8,290 of the contracts traded.
Milling wheat, barley and durum were all untraded.
Settlement prices are in Canadian dollars per metric ton.
SOYBEAN futures at the Chicago Board of Trade were down by five to 14 cents per bushel on Friday, as chart-based selling and positioning ahead of the long weekend weighed on prices.
US markets will be closed Monday, May 25, for Memorial Day.
Strength in the US dollar index accounted for some of the weakness in soybeans, as the firmness in the currency will make exports less attractive to international buyers.
The large South American crop and good US production prospects were both bearish for prices, according to analysts.
SOYOIL settled lower on Friday, pressured by the rising US dollar and losses in crude oil.
SOYMEAL futures settled narrowly mixed on Friday. Concerns over export disruptions out of Argentina were said to be providing some support for the meal market.
CORN futures in Chicago settled two to five cents per bushel lower on Friday, as good Midwestern weather forecasts heading into the long weekend weighed on prices.
Corn seeding is nearing completion across the US, while early conditions are favourable for the fields that are already planted.
The losses in wheat also put some spillover pressure on the corn market.
WHEAT futures in Chicago were down by three to seven cents per bushel on Friday, as profit-taking ahead of the Memorial Day weekend weighed on prices.
After weather-related concerns helped prop up the US wheat futures for most of the past week, the market was due for a modest correction as speculators booked profits.
The fact that US wheat remains expensive in the global market, especially given the strengthening US dollar, added to the softer tone on Friday.
However, the underlying weather issues, including excess moisture in the southern pains and recent coolness in the northern spring wheat regions, did remain supportive overall.
– The US Wheat Associates and the National Association of Wheat Growers are calling on the Canadian government to change its grain grading system to increase the fairness in cross-border trade. Under the current Canada Grains Act and Varietal Registration System, US wheat is downgraded when it moves into Canada.
– Rabobank released updated price forecasts today, lowering their projections for US wheat futures. The company said the current weather concerns were unlikely to be bullish in the long run.
