By Terryn Shiells and Marney Blunt, Commodity News Service Canada
WINNIPEG, Aug 27 – ICE Futures Canada canola contracts ended weaker after a day of choppy, two-sided trade on Wednesday. The sharp upswing in the value of the Canadian dollar, which gained a full cent against the US dollar on Wednesday, was behind the weakness.
Some spillover pressure also came from the declines seen in Chicago soybean and soyoil futures, analysts said.
Ongoing expectations of record large soybean production in the US this year continued to overhang North American oilseed markets.
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However, worries about cold, wet weather possibly damaging some canola crops in parts of Western Canada this week limited the declines.
Sentiment that the market was oversold and due for a corrective bounce was also supportive.
About 15,265 contracts traded on Wednesday, which compares with Tuesday when 20,378 contracts changed hands.
Milling wheat, durum and barley futures were untraded, though the Exchange made adjustments to wheat prices after Wednesday’s close.
SOYBEAN futures in Chicago for delivery after harvest were lower on Wednesday due to favourable weather conditions in parts of the U.S. Midwest, while contracts for delivery before the harvest gained amid tight supplies, analysts say.
The weather forecast holds scattered showers which will beneficial for soybean crops in the Midwest.
Processor margins and interest remain strong but early harvest bushels are discouraging ownership of the September contract, traders say. The September contract, which expires in three days, was the only contract that saw gains.
Talk in the market of the best crop in two decades and ideas that this week’s rains will help boost yields are also bearish factors, along with ideas that Brazilian and Argentina soybean acres will surge in 2015.
Traders are paying attention to recent reports of disease popping up in parts of the U.S. Midwest, particularly sudden death syndrome (SDS). However, the futures market has not yet reacted bullishly to the news given the extremely bearish weather forecasts and yield reports.
SOYOIL futures in Chicago closed lower on Wednesday.
SOYMEAL futures closed higher on Wednesday, keeping the spread with soybean oil.
CORN futures in Chicago were nearly unchanged on Wednesday despite abundant rainfall in the U.S. Midwest, which further improved crop conditions, traders say.
Approximately 1.25 inches of rain fell in certain areas of the U.S. Corn Belt on Tuesday, according to weather forecasters, who are also expecting another inch of rain to fall on Wednesday. About 73 per cent of the U.S. corn crop was rated as good or excellent as of Sunday, up from 72 per cent the previous week, according to the U.S. Department of Agriculture (USDA).
This year the USDA has forecast corn production at 14 billion bushels on yields of 167.4 bushels an acre, which would be a record production. Ideal weather conditions since seeding for most of the Midwest had kept crop ratings at lofty levels this year.
WHEAT futures in Chicago were higher on Wednesday, amid lingering quality concerns and geopolitical tensions between Russia and Ukraine, brokers say.
Precipitation in the U.S. Midwest continues to slow spring wheat harvest, which is causing lingering quality concerns for the higher protein classes of wheat.
Traders continue to look for export disruption in Russia and Ukraine, as reports of increased Russian involvement surfaced overnight. However, there are also talks of ceasefire negotiations. Both Russia and Ukraine are large exporters of wheat.
The strong U.S. dollar had been a limiting factor with values at 13-month highs despite some weakness earlier in the day, brokers say.
• Algeria’s grain agency has told traders it would reject cargoes containing wheat from different origins after news that France had imported wheat to boost the quality of contracts signed before harvest.
• France showed it retained firepower in wheat exports markets, despite merchant ‘panic’ instilled by rain damage to quality, even as it lost out on the latest tender by Egypt, the world’s top importer of wheat.
• Heavy precipitation in the past few weeks had deteriorated the of the European wheat crop. Traders estimated that this year share milling wheat will not exceed 59 per cent. Last year 71 per cent of the wheat harvest was adequate for milling wheat.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
