By Phil Franz-Warkentin and Dave Sims, Commodity News Service Canada
April 9, 2014
Winnipeg – ICE Futures Canada canola contracts were up on Wednesday, hitting fresh four month highs as chart-based buying and spillover from the advances in CBOT soybeans provided support.
Speculators adding to long positions were behind much of the activity, as both old and new crop contracts moved above nearby resistance, according to participants.
A lack of significant farmer selling also underpinned canola, with most producers only said to be making sales on a scale up basis.
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Gains in the CBOT soy complex provided some spillover support for canola as well, as the US markets reacted to a tighter-than-expected ending stocks forecast from the USDA.
On the other side, the stronger Canadian dollar did put some pressure on values. Canada’s burdensome supply situation, together with early expectations for an acreage increase this spring, also helped limit the gains.
About 31,885 canola contracts were traded on Wednesday, which compares with Tuesday when 33,365 contracts changed hands. Spreading accounted for 22,054 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 rose nine to 16 cents Wednesday, their highest level in eight months, as the USDA’s monthly report projected tighter supplies.
US soybean ending stocks are pegged at 135 million bushels, down 10 million from last month.
US Imports are projected at a record 65 million bushels based on trade reported through February and prospective large shipments from South America during the second half of the marketing year.
The forecast illustrates how the demand from China is so strong that US processors, who turn soybeans into cooking oil and livestock feed, will need to import to meet their needs.
Profit-taking at the highs did limit the advances, with the May contract unable to hold above the psychological US$15.00 per bushel level.
SOYOIL futures were higher, finding support from the USDA report.
SOYMEAL futures ended higher on Wednesday, briefly touching their highest point in six months before falling back into range.
WHEAT futures in Chicago fell 10 to 12 cents Wednesday on the back of the USDA report which projected global stockpiles greater than expected.
The USDA says world inventories for the year ending May 31 are expected to total 186.7 million metric tonnes. That is three million tonnes higher than pre-report estimates.
The report also said world wheat imports for 2013/14 are lowered 1.7 million tonnes mostly reflecting a 1.5-million tonne reduction for China.
CORN futures in Chicago ended two to seven cents lower Wednesday, as USDA projections for a reduced stockpile of corn underwhelmed investors who believe existing stockpiles will be enough to avoid shortages.
The monthly supply-and-demand report estimates US corn stockpiles at 1.331 billion bushels at the end of the 2013-14 season. That is less than an analyst’s report yesterday which estimated 1.403 billion bushels.
Farmers in the Midwest are reporting that the ground is starting to thaw and planting could go quickly if the warm temperatures hold.
– Wheat production in Australia’s 2014/15 marketing season could total 27 million tonnes lower than the 2013/14 marketing year, according to an attache in the country.
– The European Union is reportedly close to approving duty-free import quotas for Ukrainian grain.
– Domestic demand for Brazilian wheat from the southern state of Rio Grande do Sul is expected to shrink, as it has grown more expensive than US imports, even with external tariffs applied, according to a representative from a South American consulting firm.
Settlement prices are in Canadian dollars per metric ton.
