By Terryn Shiells and Phil Franz-Warkentin, Commodity News Service Canada
WINNIPEG – ICE Futures Canada canola contracts were sharply weaker on Tuesday, undermined by the liquidation of long positions by speculators. The specs were moving money out of commodities, including canola, and into equities, according to analysts.
Improving weather conditions for seeding and development of Western Canadian crops this week was also behind some of the losses.
Further downward pressure came from the weaker tone seen in Chicago soybean and soyoil futures.
Sell-stops were hit on the way down and helped to exaggerate the downward move.
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However, continued ideas that canola is undervalued compared to other oilseeds tempered the losses.
About 26,539 canola contracts were traded on Tuesday, which compares with Monday when 3,702 contracts changed hands.
Milling wheat, durum and barley futures were untraded and unchanged.
SOYBEAN futures at the Chicago Board of Trade were down 18 to 29 cents per bushel on Tuesday, as favourable Midwestern weather conditions and chart-based selling weighed on values.
Speculators were holding large long positions in soybeans, and the improving production prospects for 2014 triggered a round of fund selling, according to participants.
Losses in outside markets, including Malaysian palm oil and Chinese soybeans, contributed to the declines in the US futures.
Tight old crop supplies did remain somewhat supportive, helping limit the losses.
SOYOIL futures were down nearly half a cent per pound in most months on Tuesday, as the soy complex moved lower across the board.
SOYMEAL futures were down eight to ten dollars per hundredweight on Tuesday, following soybeans.
CORN futures in Chicago were down eight to ten cents per bushel on Tuesday, as good weather conditions for seeding and crop development across most of the Midwest weighed on values.
Weather conditions over the past week were generally described as favourable for seeding the last of the US corn crop, with farmers expected to have made good progress in the latest weekly report. The USDA is expected to confirm that seeding was close to 90% finished as of this past Sunday.
The losses in corn were tempered by solid export demand, with weekly inspections topping trade guesses at over a million tonnes. Talk that the US government may be reconsidering cuts to the country’s ethanol mandate was also supportive for corn.
WHEAT futures in Chicago settled nine to eleven cents per bushel lower on Tuesday, with recent rainfall across the dry Southern Plains behind some of the selling pressure.
Kansas, Oklahoma, and Texas all received some much needed moisture over the past week, which should help boost the yield prospects for the wheat crops there.
The ongoing tensions in Ukraine, following an election over the weekend, remained somewhat supportive as well. However, analysts were generally of the opinion that grain exports would not be affected by the continued political uncertainty.
• Ukraine has already exported 30.9 million tonnes during the current marketing year that began July 1, 2013, according to the country’s agriculture department. The exports are running well ahead of the previous year’s pace of 23.0 million tonnes exported by this time.
• Spring wheat and corn seeding is running behind normal in North Dakota, as wet conditions have delayed planting operations. While state representatives were calling on the USDA to push back crop insurance deadlines, those requests were denied. Farmers in North Dakota have until May 31, or June 5, depending on their location, to get full coverage for spring wheat.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
