By Phil Franz-Warkentin and Brandon Logan, Commodity News Service Canada
Jan. 28, 2014
Winnipeg – ICE Futures Canada canola contracts bounced around both sides of unchanged on Tuesday, but the bias was lower by the close.
Spillover from the gains in CBOT soyoil did provide some underlying support for the futures throughout the session, according to traders.
Continued weakness in the Canadian dollar, which was trading at its weakest level relative to its US counterpart in over four years, was also supportive. Ideas canola is oversold and cheap compared to other oilseeds underpinned the futures as well.
Read Also
Canadian Financial Close: C$ steady Friday
Glacier FarmMedia — The Canadian dollar held steady on Friday as investors squared positions ahead of the weekend. The Canadian…
However, losses in CBOT soybeans and soymeal did limit the upside potential, and canola turned lower as the day progressed.
Canada’s record large crop, and expectations that logistical issues will keep the supply situation burdensome through the next crop year as well, also remained a bearish influence on the canola market, according to participants.
About 17,118 canola contracts were traded on Tuesday, which compares with Monday when 17,708 contracts changed hands. Spreading accounted for 14,036 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following yesterday’s close.
US Grains and Oilseeds Review
SOYBEAN futures were unchanged to two US cents per bushel weaker on Tuesday, undermined by profit taking following recent gains, industry watchers said.
Further weakness came from the ongoing soybean harvest in South America, as Brazil is expecting a record large crop, analysts said.
With large supplies nearing the market, there are also concerns that China may cancel US soybean shipments and shift demand to Brazilian beans.
However, stronger-than-expected US demand last week limited any further losses, as did spillover from the gains seen in the soyoil market.
SOYOIL futures closed 31 to 34 points stronger on Tuesday, underpinned by spreading against soymeal, brokers said.
SOYMEAL futures were US$0.60 to US$2.30 weaker on Tuesday, undermined by spreading against soyoil, analysts said.
CORN futures were close to unchanged on Tuesday, as a USDA report that said exporters sold 110,000 metric tonnes of corn to Spain on Tuesday provided some support, traders said.
Further strength came from concerns that cold weather is slowing the movement of grain from farms, brokers said.
However, favourable weather conditions for the development of corn crops in Argentina and Brazil were bearish.
CBOT WHEAT, MGEX SPRING WHEAT and KCBT RED WHEAT futures closed mixed on Tuesday, underpinned by reports that some of the US winter wheat crop has been damaged by extremely cold conditions, market watchers said.
According to Commodity Weather Group, cold conditions have damaged 5% of the winter wheat crop, mostly in central South Dakota, northeast Missouri and central Illinois.
However, on the other side, forecasts calling for better weather in the US going forward are likely to eliminate any further concerns of conditions hurting winter wheat crops, investors said.
Daily World Wheat News
• Egypt purchased 240,000 tonnes of wheat on Tuesday, with 180,000 tonnes coming from Russia and 60,000 tonnes from the US.
• According to a South African senior statistician, the country produced roughly 1.8 million metric tonnes of wheat during the 2013/14 season.
• Germany’s statistics office reported that wheat exports were down 30% in November 2013 from a year earlier.
Settlement prices are in Canadian dollars per metric ton.
