By Dave Sims, Commodity News Service Canada
Winnipeg, January 2 – The ICE Futures Canada canola market finished stronger on Friday, after a staggering drop in the Canadian dollar pushed canola higher on a light-trading day.
Activity was very light which helped to exaggerate the advances, analysts said.
At one point the Canadian dollar was at its lowest point in six years, making canola more attractive to buyers on the international market.
Canola enjoyed some support from Malaysian Palm oil and European rapeseed while commercial demand was also steady.
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However, sizable losses in the US soy complex limited the gains.
As well, the large soybean crop in South America, which is just a few weeks away from being harvested, was a bearish force overhanging the market.
Around 7,999 canola contracts were traded on Friday, which
compares with Wednesday when around 12,202 contracts changed hands.
Spreading accounted for 3,008 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
Corn futures in Chicago ended slightly lower on lukewarm demand.
There are concerns the strength of the US dollar is set to make the opening days of 2015 a tough time for exporters. On Friday the USDA reported that the net total of corn sales was 895,000 metric tonnes, down 4.6% from the previous week.
Ethanol production is expected to decrease sharply as gasoline becomes cheaper, said industry-watchers.
However, the USDA did note Japan came through with a purchase of 210,000 tonnes of new crop corn, which limited the losses.
Soybean futures in Chicago dropped 15 to 16 cents per bushel Friday as farmers in Brazil began to make preparations for the upcoming harvest.
Foreign buyers have already begun to purchase future contracts of soybeans in South America, which was bearish for US values. Some analysts project the South American crop will be over 100 million metric tonnes.
Soybeans appear ready to test the psychologically important US$10 a bushel level with their recent downward movement, said a trader.
SOYOIL futures ended five points lower due to reduced demand.
SOYMEAL futures also ended lower.
WHEAT futures in Chicago ended seven to eight cents per bushel lower Friday as traders who had been long in the market liquidated their positions. They did so because countries with weaker currencies than the US have stepped in to fill a supply shortage out of Russia.
Analysts are also trying to gauge future supply demands due to the strength seen in the US dollar.
As well, there are some conflicting numbers over demand for US wheat. In its last weekly report the USDA noted wheat sales were up 21% from the week previous. However when calculated over a four-week average, wheat sales were down 8%, leading pundits to weigh in with different interpretations.
– The eastern Midwest is expected to hit very low temperatures next week that could damage the soft red winter wheat crop, according to several weather forecasts.
– Pakistan and Indonesia have indicated they greatly want to expand the volume of trade between the two countries with wheat being one of the main commodities.
