By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
Feb. 12, 2014
Winnipeg – ICE Futures Canada canola contracts settled sharply lower on Wednesday, dropping to fresh three-and-a-half-year lows as speculative selling continued to build on itself.
March canola traded at the weakest level for the front month contract since June 2010, with speculators behind much of the selling pressure, according to participants.
Losses in CBOT soybeans put some spillover pressure on canola as well, but soyoil was a little firmer and canola lost ground to the soy complex overall. The widening spread between the two commodities was tied to speculators who were long beans and short canola adding to those positions, said a broker.
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Steady farmer hedges, together with an ongoing lack of end user demand, added to the declines. While canola does continue to look very cheap compared to other oilseeds, the ongoing logistics issues across the Prairies are limiting the ability of exporters or domestic crushers to capitalize on those low prices.
About 35,378 canola contracts were traded on Wednesday, which compares with Tuesday when 26,259 contracts changed hands. Spreading accounted for 27,548 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Tuesday’s close.
SOYBEAN futures closed three to 12 US cents per bushel lower on Wednesday, as confirmation that China has cancelled previously made US soybean purchases weighed on the market, analysts said.
The USDA reported that China cancelled 272,000 tonnes of US soybeans that were to be exported in 2013/14. China also bought 240,000 tonnes of US beans for 2014/15 delivery, the USDA said.
Forecasts calling for beneficial weather for South America’s large soybean crop added to the bearish tone.
Further downward pressure came from expectations that the USDA will show large US soybean acreage in a report next week, brokers said.
SOYOIL futures were seven to 16 points higher following the advances seen in Malaysian palm oil futures overnight, brokers said.
SOYMEAL futures closed US$3.70 to US$5.70 weaker, as the news of Chinese cancellations of US soybean orders was bearish for prices, traders said.
CORN futures were two US cents lower to two cents higher Wednesday, with nearby contracts experiencing most of the downward price action.
Continued support came from Monday’s USDA report, which showed lower than expected US ending stocks for 2013/14 and stronger than anticipated export demand.
But, skepticism that the USDA’s export projection will be met, due to strong competition from Ukraine and South America, was bearish.
Ideas that supplies of corn in the US are still ample, despite being smaller than expected, also undermined prices, participants said.
WHEAT futures in the US were mixed, with Minneapolis futures seven cents lower to three cents higher and Kansas City prices four cents lower to two cents higher. Chicago wheat futures were weaker, closing two to three cents lower.
Forecasts calling for beneficial warmer weather across US winter wheat growing regions weighed on prices.
The large global supply situation and reports of adequate snow cover in many US winter wheat fields were also bearish.
On the other side, strong export demand and news that Japan secured a tender of US milling wheat overnight were bullish, traders said.
• Japan purchased 286,091 tonnes of wheat in their weekly tender, with 67,138 tonnes from Canada, 32,890 from Australia and 186,063 tonnes from the US.
• Ukraine’s winter grain crop was rated as 93 per cent in good to fair condition, according to UkrAgroConsult.
• Russia exported 680,000 tonnes of wheat in January, the Russian Agriculture Ministry reported.
• Global wheat harvested area is expected to increase to 224.2 million hectares in 2014/15, up 5.5 million hectares from 2013/14, the International Grains Council said.
Settlement prices are in Canadian dollars per metric ton.
