By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
March 12, 2014
Winnipeg – ICE Futures Canada canola contracts were up on Wednesday, recovering from earlier declines as speculative buying came forward to provide support.
After rallying sharply higher on Tuesday, canola initially started Wednesday’s session on the defensive as losses in the CBOT soy complex spilled over to weigh on prices. However, canola remains cheap compared to soybeans, and the Canadian market managed to turn higher as the spread between the two commodities narrowed in.
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Speculators are still holding large short positions in canola, and were buying back some of those contracts, according to traders.
A lack of significant farmer selling, the weaker Canadian dollar, and ideas that the persistent logistics issues across Western Canada were starting to show some improvement provided further support, said traders.
About 21,450 canola contracts were traded on Wednesday, which compares with Tuesday when 13,193 contracts changed hands. Spreading accounted for 15,708 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Tuesday’s close.
SOYBEAN futures closed 11 to 30 US cents bushel lower on Wednesday, as concerns about China cancelling US soybean orders were bearish.
Reports that China has cancelled South American soybean orders because their ports are starting to get full sparked the fears, brokers said.
Further downward pressure came from larger than expected US ending stocks of soybeans for 2013/14 in a recent USDA report and reports of good harvest progress and movement of soybeans in Brazil.
An increase in farmer selling in the US and expectations of a large 2013/14 US soybean crop also fuelled some of the declines.
SOYOIL futures were 31 to 55 points lower, following the losses seen in Malaysian palm oil and soybean futures, traders said.
SOYMEAL futures closed US$4.00 to US$7.70 lower, taking some direction from the losses seen in soybeans, participants said.
CORN futures in Chicago settled five to six cents US a bushel higher on Wednesday, lifted by spillover support from the gains seen in wheat as well as steady demand, market watchers said.
Worries that prolonged winter weather may delay the planting of corn in some parts of the US also fuelled the advances.
However, a recent pickup in farmer selling and spillover pressure from the weakness in soybeans helped to limit the advances.
WHEAT futures in the US were up sharply amid concerns about adverse weather harming US winter wheat crops. Chicago, Kansas City and Minneapolis futures finished 19 to 25 US cents a bushel higher.
Dry conditions were said to be plaguing winter wheat crops in some parts of the US Plains, while warm temperatures in the southern regions were bringing some crops out of dormancy prematurely.
Uncertainty surrounding the political problems in Ukraine and Russia, and how they may affect wheat exports out of the regions going forward, were also bullish, analysts said.
• The 2014/15 US soft red winter wheat crop is expected to produce 427.0 million bushels, from 564.9 million last year, the North American Millers Association said.
• Farmers in Russia have planted 65,800 hectares of crops so far this spring, which compares with 14,000 hectares at the same time last year, the country’s agriculture ministry said. Planted area is expected to total 31.8 million hectares this year, an increase of 1.7 per cent from a year ago.
• Ukraine expects to export a record 33.0 million tonnes of grain this year, up from a previous estimate of 32.5 million tonnes, according to the country’s agriculture ministry.
Settlement prices are in Canadian dollars per metric ton.
