By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
March 11, 2014
Winnipeg – ICE Futures Canada canola contracts were sharply higher on Tuesday, with speculative buying a feature as the nearby technical bias has shifted higher, according to participants who said light volumes likely exaggerated the bounce in canola.
The gains in canola came despite a downturn in the CBOT soy complex. Canola remains very cheap compared to soybeans, and some of the relative strength in the Canadian market was said to be tied to fund traders adjusting that spread by covering short positions in canola while liquidating long positions in the US.
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News that Canada had negotiated a free trade agreement with South Korea was also somewhat supportive, as the deal will open up an additional market for Canadian canola exports, according to a news release from the Canola Council of Canada.
On the other side, the recent strength in the canola market was making prices more attractive to farmers, and increased producer farmer selling tempered the gains, according to participants.
The ongoing logistics issues slowing grain movement across the Prairies remained a bearish influence overhanging the canola market as well, said traders.
About 13,193 canola contracts were traded on Tuesday, which compares with Monday when 11,866 contracts changed hands. The Spreading accounted for 8,012 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Monday’s close.
SOYBEAN futures closed eight cents lower to 13 US cents higher a bushel higher on Tuesday, with nearby contracts moving lower and deferred prices moving higher.
Monday’s USDA report, which showed larger than expected 2013/14 US ending stocks for soybeans, continued to be bearish.
Ideas that China and other countries may start to cancel some previously made US soybean orders soon also weighed on the market.
On the other side, worries about tight US supplies and expectations that CONAB, Brazil’s Agriculture department, will lower their Brazilian production figure later this week were bullish.
SOYOIL futures were six to 13 points lower, following the losses seen in Malaysian palm oil futures, traders said.
SOYMEAL futures closed US$0.80 lower to US$3.40 higher on Tuesday, following the price action seen in soybeans, participants said.
CORN futures in Chicago settled three to six cents US a bushel higher on Tuesday, following the advances seen in wheat futures, market watchers said.
Continued strong demand from the export, domestic feed and ethanol sectors also helped corn futures move to higher ground.
A slowdown in farmer selling and short covering following Monday’s losses also fuelled some of the gains.
However, weakness in the cash market and the large US supply situation helped to limit the advances.
WHEAT futures in the US were stronger, with Chicago, Kansas City and Minneapolis futures finishing 14 to 20 US cents a bushel higher.
Concerns about dry weather plaguing US winter wheat crops over the next two weeks helped propel prices higher.
Worries about a lack of moisture over the last 30 days and possible damage from high winds in parts of Kansas were also bullish.
Continued good export demand for wheat also underpinned the market, industry watchers said.
• About 500,000 hectares of Ukraine’s grain crop was reported as being in weak condition, with the remaining 7.3 million hectares in good or satisfactory condition. The country’s government also reported that 46,000 hectares of spring grains have been planted, with 8.6 million hectares expected to be planted.
• Soft wheat exports out of France totalled 2.11 million tonnes in January, up 20 per cent from a year prior, FranceAgriMer said.
• Adverse weather conditions, including rain and strong winds, may have caused damage to some wheat crops in parts of India, including Punjab and Haryana, reports said.
Settlement prices are in Canadian dollars per metric ton.
