By Phil Franz-Warkentin and Marney Blunt, Commodity News Service Canada
July 15, 2014
Winnipeg – ICE Futures Canada canola contracts settled with small gains on Tuesday, as production uncertainty in many parts of the Prairies provided some support.
Canola was down early in the day in sympathy with CBOT soybeans, but soybeans moved off their lows and canola managed to see some independent strength as well.
In addition to the excessive moisture that flooded fields in parts of Manitoba and Saskatchewan, dryness in the Peace River region of Alberta was also raising concerns over the canola production prospects overall, and commercials were on the buy side booking some coverage, said participants.
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A weaker tone in the Canadian dollar, which retreated below 93 US cents, and a lack of significant farmer selling was also said to be somewhat supportive.
About 17,906 canola contracts were traded on Tuesday, which compares with Monday when 10,505 contracts changed hands.
Milling wheat and durum were both untraded. Barley futures saw 25 contracts trade in October, but settled unchanged.
SOYBEAN futures were down to their lowest level since January 2012 on Tuesday, as favourable weather forecast through till at least the end of the month will continue to benefit crop conditions, analysts say.
There were 136 July soybean deliveries overnight, pushing the monthly total up to 177.
As of Sunday, 72 per cent of U.S. soybeans earned top ratings, according to the U.S. Department of Agriculture (USDA). August soybean contracts have dropped 25 per cent since the end of April.
November soybean contracts closed unchanged, despite bearish pressures from favourable weather.
SOYOIL futures closed slightly higher on Tuesday.
SOYMEAL futures closed lower on Tuesday, keeping the spread with soybean oil.
CORN futures in Chicago fell to their lowest price in almost four years on Tuesday due to persistent favourable weather in the forecast benefiting crop conditions, brokers say.
There was no significant hot weather in the forecast for the U.S. Midwest this week. Cool temperatures may slow development of corn plants, but warmer weather later this week will further improve conditions, analysts say. The U.S. corn crop was rated 76 per cent good or excellent as of Sunday, according to the USDA.
Front-month corn contracts have plunged 27 per cent since the end of April amid the favourable weather conditions.
WHEAT futures in Chicago saw minimal change on Tuesday amid mixed outside market forces, traders say.
However, there was speculation that few livestock feeders will add grain to animal rations and that cheap corn will be more appealing to cattle feeders, shunning more-expensive wheat, analysts say.
There were 101 contracts delivered overnight, pushing the monthly total up to 377.
Strength in the July wheat contracts ahead of expiration along with some short-covering supported the market yesterday. However, December wheat held within its daily bearish trend, brokers say.
Traders are still questioning why Ukraine hasn’t been more aggressive with their exporting program, but there is still tension with Russia which may support the market on ideas that Chicago could find some export business soon. Export news continues to be light, but weekly export inspections showed 377,520 tonnes, which was lower than expected in comparison with the USDA forecast.
• Euronext should be able to fend off an incursion by CME Group Inc into the European wheat market as long-awaited changes to its wheat futures and support from new shareholders cement its advantage as incumbent operator, analysts say.
• Traded volumes in the European futures have grown rapidly in the past decade as volatility in grain prices drew hedgers and speculators towards derivatives, and as a boom in European wheat exports raised the profile of the region on the world market.
Settlement prices are in Canadian dollars per metric ton.
