By Terryn Shiells and Phil Franz-Warkentin, Commodity News Service Canada
WINNIPEG, Sept 22 – ICE Futures Canada canola contracts hit fresh contract lows for the third consecutive trading day on Monday. But, prices settled well off those lows as some short covering came into the market near the end of the day, analysts said.
Weakness in Chicago soybean and soyoil futures, paired with some speculative based selling during the day weighed on prices.
Improving weather, which will aid harvest efforts in Western Canada this week, added to the bearish tone, as did a pickup in farmer selling.
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Follow-through selling on recent declines and weakness in other oilseed markets, including European rapeseed and Malaysian palm oil, further undermined values.
However, the weaker Canadian dollar and some light commercial buying activity helped to limit the declines.
Oversold price sentiment and some uncertainty surrounding the size of Canada’s canola crop this year were also supportive, traders said.
About 40,648 contracts traded on Monday, which compares with Friday when 59,967 contracts changed hands. Spreading accounted for the majority of the activity.
Milling wheat, durum and barley futures were untraded, though the Exchange moved milling wheat futures slightly lower after Monday’s close.
SOYBEAN futures at the Chicago Board of Trade were down 17 to 22 cents per bushel on Monday, hitting fresh four-year lows as the market braces itself for a record large US crop.
Weather conditions remain favourable across the Midwest for both early harvest operations and the development of later-maturing fields, according to reports. Ideas that US farmers will plant even more soybeans next year, as the oilseed offers better returns compared to corn, added to the weaker tone.
Bearish technical signals contributed to the declines, according to participants. However, scale-down end user demand and ideas that the market was starting to look oversold were supportive.
SOYOIL futures were down on Monday, following soybeans. Losses in outside vegetable oil markets were also bearish.
SOYMEAL futures were down on Monday, also following soybeans.
CORN futures in Chicago were down one to two cents per bushel on Monday, as the record production prospects weighed on values.
The good Midwestern weather conditions and record US crop prospects accounted for much of the weakness in corn.
The losses in soybeans also put spillover pressure on the market. However, the ideas that some area will shift out of corn and into soybeans next year helped limit the losses in corn.
WHEAT futures in Chicago were mixed, posting small gains in the nearby December contract and losses in the more deferred positions.
Speculative short-covering together with some fresh export business provided some support for wheat on Monday. Egypt reportedly purchased 55,000 tonnes of wheat from the US in its latest tender. That was the first time the world’s largest wheat buyer purchased US wheat since February, which was seen as a sign that US prices are finally starting to look more competitive in the global market.
On the other side, the large world wheat supply situation did weigh on prices overall. The advancing US spring wheat harvest was also bearish for prices.
• Dry weather conditions allowed US farmers in the spring wheat growing region make good harvest progress during the past week, according to a report from the US Wheat Associates. Early samples were showing average protein levels of 13.6%, which was in line with the previous year’s crop.
• Winter wheat acreage in Russia is expected to remain steady on the year, despite economic sanctions imposed on the country, according to reports.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
