By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
May 22, 2014
Winnipeg – ICE Futures Canada canola contracts settled lower in the most active months on Thursday, after trading to both sides of unchanged in choppy activity.
Gains in the CBOT soy complex did provide some spillover support, but canola was unable to follow its US counterpart higher. Canola had outpaced beans to the upside recently, as speculators bought canola and sold soybeans, according to a broker. He said those traders were now adjusting their positions by doing the opposite: selling canola and buying beans.
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Planting delays in parts of Manitoba did provide some underlying support, according to participants. However, weather forecasts in the province are improving, and producers in Alberta and Saskatchewan have already made good seeding progress. A firmer tone in the Canadian dollar, and the burdensome old crop supply situation were also bearish for canola, said traders.
About 16,452 canola contracts were traded on Thursday, which compares with Wednesday when 14,826 contracts changed hands. Spreading accounted for 10,800 of the contracts traded.
Milling wheat, durum and barley futures were untraded and unchanged.
SOYBEAN futures at the Chicago Board of Trade closed 7 to 20 cents US per bushel higher on Thursday, lifted by expectations that demand for the US commodity will remain strong, which would further stress the already tight supplies, analysts said.
Better than expected weekly export sales of 164,600 tonnes for 2013/14, as reported by the USDA, were also bullish. Sales of 120,000 tonnes were also made for 2014/15 delivery.
Chart-based buying after the market broke above key resistance on Wednesday underpinned prices as well.
However, good weather for the planting and development of a very large 2014/15 US soybean crop tempered the advances.
SOYOIL futures were stronger, following the advances seen in Chicago soybean futures, traders said.
SOYMEAL futures closed higher, also following the gains in soybeans, participants said.
CORN futures in Chicago settled slightly higher, with prices unchanged to two and a half cents US a bushel higher. Spillover support came from the gains seen in soybeans.
Sentiment that the market is oversold was also behind some of the upward price action, as was steady demand for the US commodity.
However, beneficial weather that will help farmers in the US Midwest finish seeding corn crops soon helped to limit the gains.
Good soil moisture conditions in the US were also bearish; as they were helping the seeded crops get off to a good start.
WHEAT futures were weaker, with Chicago, Minneapolis and Kansas City futures seeing losses of four to nine cents US per bushel.
Signs that demand for US wheat is slowing, as the USDA reported disappointing weekly export sales, was behind some of the price softness.
Expectations of a large wheat crop out of the Black Sea region, and ideas that global supplies of the commodity are ample further weighed on values.
Forecasts calling for beneficial rain across the US winter wheat belt this week were also bearish for some wheat futures. The rain could improve soil moisture conditions and production prospects for the US winter wheat crop.
• According to the USDA, 142,200 tonnes of wheat were sold for export during the week ended May 15, 2014 for delivery in 2013/14. That was up from the week prior, but down 39 per cent from the four-week average. There were 209,800 tonnes sold for 2014/15 delivery.
• Iraq purchased 150,000 tonnes of Russian wheat, to be delivered in September or October this year.
• The rural society of Argentina forecast that wheat acreage in the country would increase to more than 4 million hectares, up from 3.6 million hectares this year.
Settlement prices are in Canadian dollars per metric ton.
