By Phil Franz-Warkentin and Terryn Shiells, Commodity News Service Canada
August 12, 2014
Winnipeg – ICE Futures Canada canola contracts were weaker on Tuesday, as confirmation of the large US soybean crop from the USDA weighed on values.
In a much anticipated report, the USDA pegged the country’s soybean crop this year at a record 3.816 billion bushels. The report was relatively in line with trade guesses, but the official numbers were still enough to weigh on values on both sides of the border, according to analysts.
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Bearish technicals contributed to the declines in the Winnipeg futures, although canola managed to hold above chart support and ended well off its session lows.
Continued uncertainty over the size of the Canadian crop, with many areas now thought to be in need of some moisture, was also supportive, according to participants.
About 13,840 canola contracts were traded on Tuesday, which compares with Monday when 10,752 contracts changed hands. Spreading accounted for 6,020 of the contracts traded.
Milling wheat, durum, and barley were all untraded, although wheat prices were revised lower after the close.
SOYBEAN futures at the Chicago Board of Trade ended 11 to 14 cents US a bushel lower on Tuesday, reacting to a bearish USDA report that pegged ending stocks for both 2013/14 and 2014/15 at larger than expected levels, analysts said.
The USDA pegged 2013/14 ending stocks for US soybeans at 140 million bushels, unchanged from their previous report, but above pre-report estimates of 136 million. Ending stocks for 2014/15 were estimated at 430 million bushels, beating guesses of 414 million.
US soybean production for 2014/15 was raised to 3.82 billion bushels, but the USDA’s guess fell right in line with expectations.
Some support came from late Monday afternoon’s USDA report, which showed the US soybean crop dropped to 70 per cent good to excellent as of Sunday, from 71 per cent the week prior.
SOYOIL futures were softer, reacting to the bearish USDA report along with soybeans, market watchers said.
SOYMEAL futures finished weaker, taking some direction from the declines seen in soybeans, traders said.
CORN futures in Chicago settled unchanged to two cents a bushel higher Tuesday, as the USDA pegged corn production at 14.03 billion bushels for 2014/15. The figure was above last month’s guess, and is record large, but fell below expectations of 14.25 billion bushels.
Ending stocks for old and new crop corn in the US were tighter than expected. The USDA pegged 2013/14 carryout at 1.18 billion bushels, which compares with pre-report guesses of 1.25 billion bushels. New crop ending stocks were estimated at 1.81 billion bushels as well, while traders expected more than two billion.
Though, some downward pressure came from the USDA’s weekly crop report, which was released late Monday afternoon. The USDA pegged the US corn crop as being 73 per cent in good to excellent condition as of Sunday, unchanged from last week.
WHEAT futures were lower, with Chicago, Minneapolis and Kansas City futures ending seven to twelve cents US a bushel lower.
Downward pressure came from the USDA report, which showed 2014/15 US all wheat production was slightly higher than expected in Tuesday morning’s report, analysts said.
The government agency pegged 2014/15 all wheat production in the US at 2.03 billion bushels, while guesses called for about 2.01 billion bushels.
World ending stocks were upped to 193 million metric tons, from 189 million in July. Pre-report expectations called for about 190 million metric tons.
US ending stocks of wheat were slightly higher than the last report at 663 million bushels, but fell in line with expectations.
Good conditions for the US spring wheat crop and reports that the US winter wheat harvest is nearing completion amid good weather were helping to weigh on prices as well.
• The US spring wheat crop was rated as 70 per cent good to excellent as of Sunday, August 10, unchanged from the week prior, the USDA reported. Harvest had also begun for the spring cereal in the US, with six per cent of crops combined.
• France is expected to produce a record large soft wheat crop this year, the French farm ministry said. Production of the crop is pegged at 37.3 million tonnes in 2014, from their previous estimate and 36.5 million tonnes.
• Some farmers in the United Kingdom have reported seeing record large yields of 10 to 12 tonnes per hectare (four to five tons per acre) for winter wheat this year due to good growing conditions.
Settlement prices are in Canadian dollars per metric ton.
