By Phil Franz-Warkentin, Commodity News Service Canada
Feb. 27, 2014
Winnipeg – ICE Futures Canada canola contracts were stronger on Thursday, holding onto good gains despite a late downturn in the CBOT soy complex.
Speculative short covering accounted for much of the strength in canola, with fund traders said to be buying back some of their large short positions in canola while liquidating long positions in soybeans.
An initial rally in CBOT soybeans was also somewhat supportive for canola, although canola managed to show some independent strength when beans turned lower as canola remains underpriced compared to most outside oilseed markets, said participants.
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On the other side, Canada’s record large canola crop and the ongoing logistics issues slowing movement across the Prairies remained a bearish influence overhanging the canola market.
About 30,776 canola contracts were traded on Thursday, which compares with Wednesday when 33,544 contracts changed hands. Spreading accounted for 25,604 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Wednesday’s close.
SOYBEAN futures at the Chicago Board of Trade settled six to 18 cents per bushel lower on Thursday, as farmer selling and speculative liquidation came forward at the highs to weigh on prices.
Soybeans had been up by over 40 cents per bushel at one point during the day, but ran into resistance to the upside and eventually turned lower.
Strong weekly export demand accounted some of the early buying interest in beans, as the USDA reported weekly sales of over 600,000 tonnes. The sales were at the high end of trade expectations and were seen as highlighting the tightening US supply situation, especially as China has still not cancelled any previous purchases.
SOYOIL futures were lower on Thursday, dropping in sympathy with beans.
SOYMEAL futures were lower on Thursday, as selling came forward at the highs.
CORN futures in Chicago settled with small losses of five to seven cents on Thursday, as expectations for a large US corn crop continued to overhang the futures.
However, the losses were tempered by good demand from both the livestock and domestic ethanol sectors.
Weekly US corn sales, of just under a million tonnes, were also supportive.
WHEAT futures in Chicago settled 15 to 18 cents per bushel lower on Thursday, as export demand shows signs of backing away. Minneapolis and Kansas City futures were also down on the day.
Weekly US wheat export sales, at 365,100 tonnes, were down 14% from the previous week and were seen as confirming that the recent strength in the US wheat market was causing some end users to turn to other origins.
Bearish technical signals contributed to the declines, although concerns over winterkill in some parts of the Midwest did provide underlying support.
– The European Union reported weekly soft wheat exports of 932,000 tonnes, which was up from 756,000 tonnes the previous week and the strongest level for the crop year to date.
– The International Grains Council forecast global wheat production in 2014/15 at 696 million tonnes, which would compare with an estimated 708 million tonne crop in the current crop year.
Settlement prices are in Canadian dollars per metric ton.
