By Phil Franz-Warkentin and Marney Blunt, Commodity News Service Canada
June 18, 2014
Winnipeg – ICE Futures Canada canola contracts were stronger on Wednesday, as weather concerns and speculative short-covering gave the market a boost.
Heavy rains in southern Alberta, and forecasts calling for more moisture across the rest of the Prairies over the next few days, were leading to concerns over flooding in some areas. The weather concerns were enough to trigger a short covering bounce in canola, according to a broker. Chart based buying added to the advances, with some buy stops hit on the way up.
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A lack of significant farmer selling was also supportive, as line companies are being forced to pay up to secure supplies, traders added.
Gains in CBOT soyoil provided some spillover support for canola as well, although soybeans were mixed for most of the day.
The large old crop canola supplies still overhanging the market did temper the advances to some extent.
About 21,438 canola contracts were traded on Wednesday, which compares with Tuesday when 17,382 contracts changed hands.
Milling wheat, durum and barley futures were untraded and unchanged.
SOYBEAN futures at the Chicago Board of Trade gained on Wednesday after unknown buyers purchased U.S. oilseeds for delivery before the next harvest. This may also further reduce already-short supplies, analysts say.
July soybean futures gained 10.75 cents U.S. per bushel on Wednesday while November contracts increased by 1.00 cent U.S per bushel.
However, rainfall has been beneficial to the soybean crop in Kansas, Oklahoma and Texas, traders say. This may also be favourable to soil moisture for next year’s crop as well.
SOYOIL futures closed higher on Wednesday.
SOYMEAL futures closed higher on June 18.
CORN futures in Chicago gained based on signs that producers are holding supplies rather than selling them at the lowest prices in over four months. By doing this, they are forcing ethanol producers, exporters and livestock feeders to pay more for the grain, brokers say.
July corn futures gained 2.75 cents U.S. per bushel and December corn contracts saw no change from Tuesday’s close.
WHEAT futures in Chicago rose again on Wednesday due to extremely wet weather delaying the collection of the U.S. winter crop. The wet weather conditions are also causing fungal diseases and reducing grain quality, traders say.
July wheat futures increased by 5.25 cent U.S. per bushel, and December futures gained 5.75 cents U.S. per bushel.
Producers have not been able to use heavy equipment due to muddy soil conditions in the U.S. southern Great Plains and in the eastern Midwest, areas that produce hard-red winter wheat varieties and soft-red wheat. The longer these plants sit unharvested, the more vulnerable they become to fungal diseases and sprouting. Both issues can result in significant crop loss.
• The National Agricultural Statistics Service reported on Monday that approximately 2 per cent of the winter wheat in Kansas had been cut, an improvement from last year but well behind the 19 per cent historical average for mid-June.
• U.S. soft red winter wheat declined by $10 a tonne last week and has now fallen by 10 per cent in the last four weeks.
• The U.S Department of Agriculture released its June world grain supply and demand forecast last week which confirmed a positive outlook for abundant global grain supplies.
Settlement prices are in Canadian dollars per metric ton.
