By Phil Franz-Warkentin and Dave Sims, Commodity News Service Canada
October 3, 2014
Winnipeg – ICE Futures Canada canola contracts settled higher on Friday, as weakness in the Canadian dollar, a supportive Statistics Canada production report, and bullish technical signals all contributed to the gains.
The Canadian dollar was down by roughly three quarters of a cent relative to its US counterpart, which underpins crush margins and also makes canola more attractively priced to international customers. The CBOT soy complex was down on the day. However, when accounting for the exchange rate, canola held relatively steady with its US counterparts, according to a broker.
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Chart based buying did provide some support for canola as well, with the November contract moving back above the psychological C$400 per tonne level.
Statistics Canada released updated production estimates Friday morning, pegging the canola crop at 14.1 million tonnes. The number was up slightly from the 13.9 million tonnes forecast in August, but came in at the low end of trade estimates.
Given the timing of the survey in early September, when little harvest activity had occurred, market participants generally remain of the opinion that actual production will still end up closer to 14.5 million tonnes.
About 18,032 canola contracts were traded on Friday, which compares with Thursday when 23,293 contracts changed hands. Spreading was a feature, accounting for 15,890 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CORN futures in Chicago ended marginally higher Friday, as forecasts calling for rain across large areas of the US Midwest threatened to slow the harvest.
End-user demand and short-covering were supportive for values, analysts said.
Informa Economics pegged US corn production at 14.395 billion bushels on yields of 176.4 bushels an acre. That level of production would be larger than last year’s record harvest if the predictions hold true to form.
SOYBEAN futures in Chicago ended 12 to 14 cents per bushel weaker on expectations that the harvest will be delayed due to rainy weather.
Informa Economics also projected this year’s soybean production at 4.017 billion bushels on yields of 48.5 bushels an acre. That would also be a record.
The potential for cold weather to move into the US northeast and for a drier bias to establish itself in Brazil’s main northern growing area were both seen as supportive.
SOYOIL futures were lower on Friday, following soybeans.
SOYMEAL futures recorded losses, also taking direction from soybeans.
WHEAT futures in Chicago were one to three cents per bushel higher on Friday, as a new forecast from Informa Economics pegged US wheat production at 1.378 billion bushels. That compares to 1.543 billion bushels at the same time last year.
Export sales from the US have been better than expected and end-user demand is also providing some support.
Large volumes of wheat on the global market helped to limit the gains, said a trader.
– Iran’s poor quality crop has prompted it to buy 400,000 tonnes of wheat from the European Union, according to a report.
– Egypt has announced it will begin storing wheat for neighbouring countries who lack the capacity, participants said.
– Russian farmers are reportedly planting wheat, rye and barley at a faster rate than normal because of dry conditions. A market researcher explained this was because the dry soil was allowing machines, that normally had to deal with mud, to operate unimpeded.
Settlement prices are in Canadian dollars per metric ton.
