By Phil Franz-Warkentin, Commodity News Service Canada
Feb. 25, 2014
Winnipeg – ICE Futures Canada canola contracts were stronger on Tuesday, boosted by speculative short covering and spillover from the advances in CBOT soybeans.
Fund traders are holding large short positions in canola and were buying back some of those contracts on Tuesday, according to participants.
The fact that canola remains underpriced compared to most other oilseed markets was also supportive.
However, the general technical downtrend remains in place and canola ran into resistance to the upside to settle off its highs. The ongoing logistics issues across Western Canada remain a bearish influence overhanging the futures as well.
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About 30,183 canola contracts were traded on Tuesday, which compares with Monday when 22,419 contracts changed hands. Spreading accounted for 27,596 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Monday’s close.
SOYBEAN futures at the Chicago Board of Trade settled five to 12 cents per bushel higher on Tuesday, recovering from earlier declines as weather concerns in South America and bullish technical signals underpinned the futures.
Talk of rain delays for harvest operations in Brazil were behind some of the strength, as any problems with the South American crop will keep end users buying from the US. Political issues hampering the crush pace in Argentina were also seen as supportive for US beans.
However, the futures did run into resistance to the upside and profit-taking at the highs tempered the gains.
SOYOIL futures were down on Tuesday, with losses in outside vegetable oil markets and spreading against soymeal weighing on prices.
SOYMEAL futures were three to five dollars higher on Tuesday, boosted by good demand and political issues hampering the crush pace in Argentina.
CORN futures in Chicago settled with small gains of two to four cents per bushel, after trading around both sides of unchanged in choppy activity.
Uncertainty over Chinese demand going forward, given recent rejections over unapproved genetic traits, did limit the upside potential. Expectations for a large US crop this year remained a bearish influence as well.
WHEAT futures in Chicago settled with small gains of one to three cents in most months on Tuesday, after trading to both sides of unchanged in choppy activity. Minneapolis and Kansas City wheat futures were up by four to 11 cents.
Concerns over cold temperatures causing damage to the US winter wheat crop provided some underlying support.
On the other side, news that Egypt had cancelled a 110,000 tonne purchase of US wheat accounted for some selling pressure in wheat.
– Tunisia bought 75,000 tonnes of wheat and 59,000 tonnes of durum in a tender, reported European traders.
– Egypt has approved financial guarantees of US$75.3 million to import wheat. The country is the world’s largest wheat importer and is forecast to purchased up to 700,000 tonnes before its own crop is harvested in April, according to reports.
Settlement prices are in Canadian dollars per metric ton.
