By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
September 15, 2014
Winnipeg – ICE Futures Canada canola contracts were stronger on Monday, as a rally in CBOT soyoil provided some underlying support for the Canadian futures.
Soyoil jumped sharply on Friday, but canola lagged to the upside at that time. With soyoil posting big advances again Monday, canola was pulled higher as well, said analysts.
However, the gains in canola were not as pronounced as seen in soyoil. Ongoing uncertainty over the size and quality of the Prairie canola crop kept some caution in the Canadian market, said participants.
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While cold and wet conditions caused harvest delays last week, the extent of the damage is unknown and many participants remain of the opinion that actual canola production will still end up above earlier projections.
Nearby forecasts look more favourable across Western Canada, and traders will be watching yield reports closely as the harvest advances.
Bearish technical signals did temper the advances, with any strength seen as a selling opportunity from a chart-standpoint, according to traders.
About 13,338 canola contracts were traded on Monday, which compares with Friday when 13,023 contracts changed hands. Spreading accounted for 9,804 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
SOYBEAN futures at the Chicago Board of Trade ended three to six cents US per bushel higher on Monday, lifted by ideas that demand for the US commodity remains strong, analysts said. The USDA reported a fresh export sale of 118,000 tonnes of soybeans to China for delivery in 2014/15 on Monday.
Weekly export inspections data was also better than expected at 255,020 tonnes, according to the USDA.
Short covering following recent declines further underpinned soybean prices, though expectations of record large production in the US continued to overhang the market.
SOYOIL futures were up sharply, lifted by follow-through buying on Friday’s rally. Firmness in Malaysian palm oil futures was also supportive, brokers said.
SOYMEAL futures finished mostly lower, as traders worked to correct the spread between soyoil and soymeal, market watchers said.
CORN futures in Chicago settled two to five cents higher on Monday, reacting to expectations that total US corn acreage was smaller than first anticipated this year, traders said.
Sentiment that the market is oversold and due for a corrective bounce also accounted for some of the upward price movement.
However, 2014/15 US corn production is still expected to be record large, which tempered the advances.
WHEAT futures were lower, with Kansas City and Minneapolis futures ending five to 10 cents US per bushel lower. Chicago futures were only slightly weaker, seeing losses of half a cent to two cents a bushel.
A lack of fresh demand from the export market and ongoing expectations of very large global wheat supplies this year were bearish.
Follow-through selling on last week’s sharp declines also undermined prices, as did talk of good US spring wheat harvest last week.
However, concerns about drought in the southern US Plains causing problems for the development of winter wheat crops seeded this fall limited the declines.
Chart support also held for the CBOT futures as the December contract tested breaking below the US$5.00 per bushel level.
• SovEcon, a Russian analyst, pegged Russian grain production at 106 million tonnes, up from their previous guess of 104 million tonnes due to recent beneficial weather.
• The US winter wheat harvest is complete in every state except Idaho, which is at 98 per cent, and North Dakota which is only at 85 per cent. Some of the winter wheat in North Dakota may be left unharvested due to excess rainfall and a shift to focus on spring wheat combining, according to a report from US Wheat Associates.
• Saudia Arabia made a purchase of 610,000 tonnes of milling wheat for delivery in December to January. The wheat originated from the European Union, North America, Latin America and Australia, reports say.
Settlement prices are in Canadian dollars per metric ton.
