By Terryn Shiells and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, Feb. 5 – ICE Futures Canada canola contracts moved lower on Wednesday, as Tuesday’s advances were seen as a good selling opportunity for traders and farmers, analysts said.
Large Canadian canola stocks and continued problems moving the supplies out of Western Canada were also bearish.
The upswing in the value of the Canadian dollar was also responsible for some of the price weakness, as were good weather conditions for South America’s very large soybean crop.
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However, spillover support from the sharply higher Chicago soyoil futures helped to limit the declines. Gains seen in European rapeseed and Malaysian palm oil futures were also supportive.
Ideas that canola is undervalued compared to other oilseeds kept a firm floor under the market.
About 21,390 canola contracts were traded on Wednesday, which compares with Tuesday when 23,427 contracts changed hands. Spreading accounted for 17,660 of the trades.
Durum and barley futures were untraded and unchanged. Milling wheat was also untraded, though the Exchange adjusted prices after the close.
Soybean futures at the Chicago Board of Trade settled with small gains of one to three cents per bushel on Wednesday after bouncing around both sides of unchanged in choppy activity.
Tuesday’s move back above US$13.00 per bushel in the most active March contract was supportive from a technical standpoint, contributing to the firmer tone, according to participants.
Solid export demand remained supportive as well, with US soybean exports continuing to run ahead of the year ago level.
However, good weather conditions for soybeans across most of South America did limit the upside potential, especially as cheaper supplies from the region will soon be competing with the US in the international market.
Soyoil futures were higher on Wednesday, posting the largest advances of the soy complex. Adjustments to the soyoil/soymeal spread favoured soyoil during the session.
Soymeal futures were weaker on Wednesday, despite the gains in soybeans. Spreading against soyoil accounted for some of the declines that ranged from US$1.00 to US$5.00.
Corn futures in Chicago settled narrowly mixed on Wednesday, with a gain of 1.5 cents in the nearby March contract and a softer tone in the more deferred positions.
Good export demand provided some underlying support for corn, with the USDA reporting a fresh sale of 236,728 tonnes of US corn to ‘unknown destinations’ Wednesday morning.
Increased farmer selling put pressure on the other side of the market, as the recent strength in the market was said to have encouraged more producer sales.
CBOT, KCBT and MGEX wheat futures were all up two to six cents per bushel on Wednesday, seeing some follow-through buying interest after the corrective bounce seen earlier in the week.
Forecasts calling for cold temperatures across some US winter wheat growing regions later this week were also supportive. However, heavy snow cover should protect most fields.
Kansas and surrounding states received up to 10 inches of snow on Tuesday. The snow should both protect wheat crops from winterkill and also aid in boosting moisture levels, according to a report from MDA Weather Services.
• The heavy snowfall also forced KraftFoods to temporarily shut down its flour mill in Toledo, Ohio. The mill is the second largest in the country.
• The US Senate passed the final version of the country’s farm bill on Tuesday, with the legislation now set to President Barack Obama for final approval. The passage of the new bill restores funding to a number of market development programs that had been left unfunded while the bill was in limbo. The bill includes an increase in insurance options for US farmers and some adjustments in the risk management options.
• Obama said of the bill – “This bill provides certainty to America’s farmers and ranchers, and contains a variety of commonsense reforms that my administration has consistently called for, including reforming and eliminating direct farm subsidies and providing assistance for farmers when they need it most. It will continue reducing our deficits without gutting the vital assistance programs millions of hardworking Americans count on to help put food on the table for their families. And it will support conservation of valuable lands, spur the development of renewable energy, and incentivize healthier nutrition for all Americans. As with any compromise, the farm bill isn’t perfect — but on the whole, it will make a positive difference not only for the rural economies that grow America’s food, but for our nation.
Canadian canola settlement prices are in Canadian dollars per metric ton.
