By Phil Franz-Warkentin and Marney Blunt, Commodity News Service Canada
July 17, 2014
Winnipeg – ICE Futures Canada canola contracts settled near unchanged on Thursday after moving up and down throughout the session in choppy, directionless trade.
Uncertainty over the size of this year’s canola crop continued to provide some underlying support for the futures, with excessive moisture in some parts of the Prairies and dryness in others keeping some caution in the market, according to participants.
That uncertainty had end users looking to book some coverage on the one side, and was also making farmers reluctant sellers on the other side.
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However, expectations for a big US soybean crop and the resulting losses in the CBOT soy complex did put some spillover pressure on the Canadian futures.
The technical outlook also remains bearish for canola, making any gains a good selling opportunity for speculators, according to an analyst.
About 14,625 canola contracts were traded on Thursday, which compares with Wednesday when 10,206 contracts changed hands. Spreading accounted for 8,568 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
SOYBEAN futures in Chicago were lower on Thursday, despite support from heavy purchases in the past few days from foreign-based buyers, analysts say.
The sales included 365,000 tonnes of soybeans sold to Chinese-based buyers. Those sales represented the bulk of the 561,000 metric tonnes of 2014-15 crop year soybeans sold over the week, which encouraged ideas that demand for U.S. soybeans remains strong.
Traders are also paying attention to hints of drier weather conditions in the forecast for August, particularly for the western portion of the Midwest. August is a critical month for the U.S. soybean crop and an end to regular rains could damage what was otherwise expected to be a big crop.
Crops conditions are said to be looking good for the time being, which enabled price to decrease on Thursday.
SOYOIL futures in Chicago closed lower on Thursday.
SOYMEAL futures closed mixed on Thursday.
CORN futures in Chicago were higher on Thursday, as a jump in U.S. corn sales to foreign-based buyers pushed prices higher, brokers say.
There are threats of dry weather conditions in the coming weeks, which also place some momentum behind the corn contracts, reflecting fears that a run of favourable weather could come to an end.
Approximately 574,000 metric tonnes of corn for the 2013-14 season ending August 31 were sold in the week that ended July 10. This was a 58 per cent increase from the previous week and significantly higher than last month’s average, according to the U.S. Department of Agriculture (USDA).
Steady rains and cooler temperatures have been pushing corn prices 25 per cent lower since mid-May, but analysts have anticipated a rebound.
WHEAT futures in Chicago were higher on Thursday, as the market reacted to the crash of the Malaysian jet near the Ukraine-Russia border, brokers say. The jet was carrying 295 passengers. The crash raised concerns in the wheat market that grain exports from that region would be impacted.
The market is extremely oversold technically and showing plenty of loss of the downside, brokers say. However, the market still lacks a good reason for end users to extend coverage as global exporters appear to have an abundant supply of exportable wheat.
The wheat market was setup for a bounce yesterday, traders say. However, talk of an improving crop potential out of Russia, ideas that the Australian crop will be fine as El Nino was weaker than expected and continued fund selling helped to prevent that recovery bounce.
• The U.S. Department of Agriculture revised the outlook of crop harvest in the Ukraine upward by 3.3 per cent to 57.1 million tonnes for 204.
• Russian prices for milling wheat extended their decline because dry weather and higher yields are helping farmers to boost supply from the new crop in the south.
• Sudan’s strategic reserves of wheat are rapidly declining as a result of the refusal of several banks in western countries and Gulf States to open documentary credits for importing the grain.
Settlement prices are in Canadian dollars per metric ton.
