North American grain/oilseeds review: canola lower ahead of the weekend

By Terryn Shiells, Commodity News Service Canada

Winnipeg, March 7 – ICE Futures Canada canola contracts corrected lower on Friday, undermined by profit taking ahead of the weekend and Monday’s USDA supply and demand report, analysts said.

Spillover pressure from the losses seen in Chicago soyoil futures added to the bearish tone, as did a pickup in farmer selling following the rally seen over the past two weeks.

However, the downswing in the value of the Canadian dollar and ideas that Canada’s logistics problems will start to improve limited the losses.

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Canada’s Transport and Agriculture Ministers announced Friday morning that the two national railways will have to ship a minimum of 500,000 tonnes of grain per week, starting immediately. They will have four weeks to ramp up to the 500,000 tonnes, but after that they will face penalties if they don’t meet the minimum requirements.

About 27,733 canola contracts were traded on Friday, which compares with Thursday when 24,228 contracts changed hands. Spreading accounted for 17,980 of the trades.

Milling wheat, durum and barley futures were untraded, though the Exchange adjusted milling wheat prices after the close.

SOYBEAN futures closed one to 18 US cents higher a bushel higher on Friday, with nearby contracts seeing stronger gains than new crop prices.

Tight old crop supplies, paired with strong export demand for US soybeans helped the nearby contracts move significantly higher. Worries about adverse weather harming Brazilian soybeans were also supportive.

However, expectations of a large 2014/15 US soybean crop weighed on new crop values, brokers said.

Profit taking ahead of the weekend and the Monday, March 10 USDA supply and demand report were also bearish.

SOYOIL futures were 12 to 28 points lower, undermined by profit taking following Thursday’s sharp gains, brokers said. Traders were also squaring positions ahead of the weekend and Monday’s USDA report.

SOYMEAL futures closed US$3.10 to US$6.90 higher on Friday, taking some direction from the gains seen in nearby soybean futures. Spreading against soyoil was also bullish, traders said.

CORN futures in Chicago settled two to five cents US a bushel lower on Friday amid profit taking ahead of the weekend and Monday’s USDA report, participants said. Chart-based selling also came in after the market broke above US$5.00 per bushel earlier in the trading day.

A recent pick up in farmer selling, due to higher prices in the US, added to the bearish tone, as did the large US supply situation.

However, ongoing concerns about the political problems in Ukraine and continued strong demand for US corn limited the declines.

WHEAT futures in the US were stronger, with Chicago, Kansas City and Minneapolis futures finishing four to 13 US cents a bushel higher.

The futures were lifted by worries that winter wheat crops in the Southern US Plains will be damaged by dry conditions, analysts said.

Continued concerns that exports of wheat out of Ukraine may be disrupted, as political problems have halted farmer selling, further underpinned prices.

However, a pickup in farmer selling in the US, as well as profit taking following the recent rallies in the market, limited the advances.

• Reports said that the European Union granted licences for 563,000 tonnes of soft wheat exports, making a total of 20.8 million tonnes this year, from 13.7 million the year prior.

• Between six and 10 per cent of Ukraine’s winter wheat crop will need to be reseeded this spring, which is below average, the Hydrometeorological Center Director said.

• The European Union is expected to produce 144.5 million tonnes of wheat in 2014/15, up from 143.9 million tonnes in 2013/14, the EU Commission said.

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