By Phil Franz-Warkentin and Marney Blunt, Commodity News Service Canada
July 16, 2014
Winnipeg – ICE Futures Canada canola contracts settled higher on Wednesday, as ongoing uncertainty over the size of this year’s crop and spillover from the corrective bounce in CBOT soybeans provided support.
Excessive moisture in some parts of Western Canada and dryness in others has led to mounting concerns that the crop won’t live up to earlier expectations, according to participants. That production uncertainty led to some end user buying interest, as they look to ensure some coverage going forward. Meanwhile, farmers remain reluctant to make sales right now, until they get a better picture on this year’s yield prospects, said traders.
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However, the general technical outlook has turned bearish, which made any gains a good selling opportunity from a chart standpoint, said traders.
Softness in CBOT soyoil and expectations for a large US soybean crop also put some pressure on values, limiting the advances.
About 10,206 canola contracts were traded on Wednesday, which compares with Tuesday when 17,906 contracts changed hands. Spreading accounted for 5,668 of the contracts traded.
Milling wheat, durum, and barley were all untraded.
CBOT Review: Soybeans futures gain after two-year low
By Commodity News Service Canada
SOYBEAN futures in Chicago gained on Wednesday after dropping to their lowest level since January 2012.
Analysts say that priced gained in part from a U.S. Department of Agriculture (USDA) report that showed that exporters had sold 120,000 metric tonnes of the oilseeds to China for the 2014-15 crop year. The USDA also reported another sale of 240,000 metric tonnes to unknown destinations, which analysts believe is also headed for China.
Forecasts are either saying that weather conditions in the western Corn Belt will be dry or moderate with a threat of heat over the next week.
SOYOIL futures in Chicago closed lower on Wednesday.
SOYMEAL futures closed higher on Wednesday, keeping the spread with soybean oil.
CORN futures in Chicago bounced back slightly from recent losses on Wednesday, brokers say.
This gain was pushed by the USDA’s report that private exporters had sold 210,448 metric tonnes of corn for delivery to unknown destinations during the 2014-15 season that beings September 1.
This sale is an indicator of a continued international demand for U.S. corn and it also provides a boost to the sagging corn market, analysts say. Prices also rose as some investors who were short the market, or had bet on declining prices, brought contracts to exit those positions.
Front-month corn contracts plummeted more than 25 per cent since the end of April. The U.S. corn crop was rated as 76 good or excellent as of Sunday, according to the USDA.
WHEAT futures in Chicago edged higher on Wednesday despite building European supplies, traders say.
Rising from oversold levels, daily momentum studies are supporting these higher prices, especially on a close above resistance. The fact that the market closed over the pivot swing number was a mildly bullish indicator, analysts say.
There is some talk of the potential that the U.S. did some private Chicago wheat business, so traders are keeping their eyes on declining prices.
• An improved outlook for global bulk shipping rates is bad news for grain exporters as they go into their most recent sales campaign, with increased freight costs squeezing profit margins and adding to price competition in leading markets.
• U.S. wheat exporters are expected to be the most affected as ship owners prepare to crank up rates, awaiting a clamour for their vessels.
• The biggest hike is expected to be to the major Middle Eastern market, which gives smaller producers a price edge.
Settlement prices are in Canadian dollars per metric ton.
