By Terryn Shiells and Phil Franz-Warkentin, Commodity News Service Canada
WINNIPEG, May 1 – ICE Futures Canada canola contracts closed sharply lower on Thursday, undermined by spillover pressure from the large losses seen in Chicago soybeans and soyoil, analysts said.
A recent pickup in farmer selling, as they generate cash flow and make bin space ahead of spring seeding, was also bearish.
Further downward pressure came from expectations that 2013/14 Canadian carryout stocks of canola will be very large.
However, steady commercial buying interest, as they build a weather premium into prices ahead of the growing season, limited the losses. There are also some concerns about cold weather delaying planting in Western Canada.
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Continued ideas that canola remains undervalued compared to other oilseeds were also supportive.
Activity was on the quiet side on Thursday, as only about 12,189 canola contracts were traded, which compares with Wednesday when 13,528 contracts changed hands. Spreading accounted for 5,606 of the trades.
Durum and barley futures were untraded following price revisions after the close on Wednesday. Milling wheat futures were also untraded, though the Exchange adjusted prices after the close on Thursday.
SOYBEAN futures at the Chicago Board of Trade were down sharply on Thursday, pressured by soft weekly export data and improving weather forecasts across the Midwest.
The USDA reported weekly US soybean export sales at a net loss of 16,400 bushels, which means more sales were cancelled than added to the books during the week.
Forecasts calling for relatively favourable planting conditions across the Midwest in the next week were also bearish, said traders.
Chart-based selling, as some sell stops were hit on the way down contributed to the declines. However, the tight old crop supply situation did remain supportive.
SOYOIL futures were down sharply on Thursday, taking some direction from the overnight losses seen in Malaysian palm oil.
SOYMEAL futures were down on Thursday, retreating from recent highs as profit-taking weighed on values.
CORN futures in Chicago were down eight to twelve cents per bushel on Thursday, as concerns over seeding delays across the Midwest started to subside.
Forecasts calling for warmer and drier conditions across much of the Midwest, with only sporadic shower activity, should allow farmers in the region to move forward with spring seeding over the next week.
WHEAT futures in Chicago settled 12 to 14 cents per bushel lower on Thursday, as profit-taking on recent gains weighed on values. Kansas City and Minneapolis futures were down four to eight cents.
Yield estimates from a crop tour of Kansas continued to show disappointing prospects across the major wheat producing state, which was somewhat supportive for US wheat values. However, those concerns have largely been priced into the futures for the time being, which left the door open for some profit-taking.
Relatively favourable crop prospects for wheat crops elsewhere in the world also weighed on values.
• Bunge Ltd. reported losses of US$27 million in the first quarter of 2014. The company cited higher than expected wheat prices as one factor behind the losses, as the company had anticipated ‘a lower price environment’ for the grain.
• The latest updates from the Kansas wheat tour were showing average yields of 25% or more below the year ago level, with total yields possibly the smallest in 14 years.
• Australia’s weekly crop report showed higher than average rainfall across much of the country’s grain growing regions.
