By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
May 20, 2014
Winnipeg – ICE Futures Canada canola contracts were stronger on Tuesday, as speculative and commercial buying interest provided support on the first day back after a long weekend.
CBOT soybeans were stronger on Monday, when Canadian markets were closed for Victoria Day, and the need to ‘play catch up’ accounted for some of the relative strength in canola, according to participants.
However, soybeans ran into resistance, and today’s losses in the US market did temper the upside potential in canola to some extent.
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Solid end user demand, a weaker Canadian dollar, a lack of significant farmer selling, and uncertainty over the lateness of spring seeding across Western Canada were all supportive for canola.
On the other side, the large old crop supply situation does remain a bearish factor.
About 13,786 canola contracts were traded on Tuesday, which compares with Friday when 16,580 contracts changed hands. Spreading accounted for 8,852 of the contracts traded.
Milling wheat, durum and barley futures were untraded and unchanged, after seeing some price revisions following Friday’s close.
SOYBEAN futures at the Chicago Board of Trade closed six to 16 cents US a bushel lower on Tuesday, undermined by profit taking after the market tested key resistance levels earlier in the session, analysts said.
Expectations that the 2014/15 US soybean crop will be very large and ideas that the tight supply situation has largely been priced into the market were also bearish.
However, steady demand and slightly slower than expected planting progress for the 2014/15 US crop limited the downside. According to the USDA, 33 per cent of the US soybean crop was planted as of May 18, up from 20 per cent last week, but below the five-year average of 38 per cent.
SOYOIL futures were weaker, following the declines seen in outside vegetable oil markets, according to traders.
SOYMEAL futures closed lower, following the losses seen in soybeans, brokers said. Ideas that Monday’s gains were overdone were also bearish.
CORN futures in Chicago settled two to four cents US a bushel weaker on Tuesday, undermined by expectations that the 2014/15 US corn crop will be very large, analysts said.
The pace of planting in the US was slightly behind expectations during the week ended May 18, but farmers still made good progress. Farmers should be able to get a good chunk of the crop planted this week, as dry, warm weather is forecast for the US Midwest.
All the moisture seen in the US Midwest this spring will also help the crop get off to a good start, which was weighing on the market as well, industry officials said.
However, steady demand for the US commodity helped to limit the losses.
WHEAT futures on the Chicago Board of Trade ended lower, as early buying interest in the market dried up later in the session, brokers said.
Minneapolis and Kansas City wheat futures were little changed, consolidating following recent sharp losses. Slower than expected US spring wheat planting progress was supportive for Minneapolis futures, while the Kansas futures were underpinned by disappointing US winter wheat crop condition ratings.
The large global supply situation continued to overhang all three markets, traders added.
• The USDA said 29 per cent of the US winter wheat was in good to excellent condition as of May 18, down from 30 per cent the week prior.
• Spring wheat planting in the US was 49 per cent complete as of May 18, up from 34 per cent the week prior but below the five-year average of 68 per cent seeded.
• Turkey’s Council of State on grains issued a tender to import 190,000 tonnes of milling wheat to be delivered between late July and mid-August. The purchase was made because of concerns about drought causing crop losses in the region, reports said.
Settlement prices are in Canadian dollars per metric ton.
