By Terryn Shiells, Commodity News Service Canada
WINNIPEG, July 29 – ICE Futures Canada canola contracts ended weaker on Tuesday, taking some direction from the declines seen in the Chicago soy complex.
A pickup in farmer selling after Monday’s rally and improving basis levels made cash prices more attractive also weighed on the futures, according to analysts.
Forecasts calling for beneficial warm and dry weather across the Canadian Prairies this week added to the bearish tone, as did continued expectations of a very large 2014/15 US soybean crop.
Read Also
Canadian Financial Close: Loonie, TSX rise ahead of Labour Day
Glacier FarmMedia — The Canadian dollar ended the week with its highest close in a month. The loonie closed at…
However, the sharp downswing in the value of the Canadian dollar limited the losses, as it made canola more attractive to crushers and foreign buyers.
Spillover from the gains in European rapeseed futures and ongoing concerns about crop damage from flooding and dryness in Western Canada this year were also supportive.
About 14,099 contracts traded on Tuesday, which compares with Monday, when 13,747 contracts changed hands. Spreading accounted for 7,510 of the trades.
Milling wheat, durum and barley futures were untraded, though the Exchange moved wheat prices lower after Tuesday’s close.
SOYBEAN futures at the Chicago Board of Trade closed 10 to 16 cents US per bushel lower on Tuesday, reversing Monday’s losses as worries about dryness in the US Midwest next month disappeared with a change in the forecast, analysts said. The first half of August is now expected to have cooler weather, with some rain, which will be beneficial for US soybean crops.
News from the USDA’s weekly crop report late Monday that soybean crops in the US are ahead of the average development pace helped to weigh on prices as well.
However, US soybean crop conditions dropped to 71 per cent good to excellent as of Sunday, from 73 per cent the week prior, which was supportive.
SOYOIL futures were also weaker, undermined by spillover pressure from soybeans and profit taking after Monday’s advances, traders said.
SOYMEAL futures also closed lower, taking some direction from the declines seen in soybeans.
CORN futures in Chicago settled two to six cents a bushel lower. Expectations that the 2014/15 US corn crop will be record large, as forecasts call for more favourable weather next month, undermined the market.
The USDA’s crop report showed the US corn crop is still in very good condition, which was also bearish. The crop was 75 per cent in good to excellent condition as of July 27, down from 76 per cent the week prior.
However, the market is still looking ‘extremely’ oversold, which helped to limit the losses, participants said.
WHEAT futures were sharply lower, with Chicago, Minneapolis and Kansas City futures seeing losses of seven to 15 cents US per bushel.
Pressure from the advancing US winter wheat harvest, which the USDA said is now ahead of the average five-year pace, accounted for some of the price softness.
Reports that ample amounts of rainfall in the southern US Plains this summer will be very beneficial for winter wheat planting in September were also bearish, brokers said.
The large global supply situation continued to overhang prices, though reports of production problems in France and Brazil were supportive.
• According to the USDA, 83 per cent of the US winter wheat crop was harvested as of July 27, 2014, up from 75 per cent the week prior. The pace was also ahead of the five-year average of 80 per cent complete at this time of year.
• US spring wheat crops were looking good, with 70 per cent in good to excellent condition as of July 27, unchanged from the year prior, according to the USDA. At the same time in 2013, 68 per cent of the crop was rated good to excellent.
• Spring wheat yields in some parts of Manitoba were looking normal, according to reports from a crop tour of Western Canada being conducted by CWB from July 28 to 31.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
