By Terryn Shiells and Dave Sims, Commodity News Service Canada
Winnipeg, May 29 – The ICE Futures Canada canola market closed sharply higher on Friday, rallying along with the Chicago soyoil market, analysts said.
The July contract tested, and closed above the key C$470 per tonne level, which was bullish from a chart-standpoint.
Further support came from a soft Canadian dollar, strength in CBOT soybeans and worries about dry weather in Saskatchewan and Alberta.
Forecasts are also calling for below freezing temperatures in Manitoba Friday night, which could cause damage to canola fields, as many are at a vulnerable stage, according to a trader.
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However, canola is starting to look expensive relative to other oilseeds, which was limiting the upside.
Generally good weather for the US soybean crop and large global oilseed supplies were also bearish.
About 27,504 contracts traded on Friday, which compares with Thursday when 17,326 contracts changed hands. Spreading accounted for 14,706 of the trades.
Milling wheat, durum and barley futures were untraded. Though, the Exchange moved wheat prices lower after the close.
CORN futures on the Chicago Board of Trade ended two cents per bushel lower Friday, pressured by reports the US government may lower annual requirements for ethanol in gasoline. The proposal to change the levels of ethanol in refiners’ fuel mix was put forward by the Environmental Protection Agency (EPA).
There are ideas the crop in Argentina could be larger than the current estimate of 25 million metric tonnes, which was also bearish.
Large funds covered short positions in a bid to position themselves before the end of the month, which limited the declines.
SOYBEANS posted gains of three to eight cents per bushel Friday. Values were pushed upward in large part by surging soyoil futures.
Steady commercial buying interest was also underpinning the soybean market, as were signs of good export demand for old crop supplies in the US.
However, ideas that a crusher strike in Argentina was about to be settled kept a lid on the gains.
SOYOIL futures in Chicago ended 127 points higher on word the US could soon be using more biodiesel. The EPA has requested that 16.3 billion gallons of renewable fuels should be mixed into the country’s gasoline or diesel supply this year, increasing to 17.4 billion gallons next year.
SOYMEAL futures finished mixed. The near-term July contract rose higher in sympathy with soybeans while the more-deferred August contract was pressured by declining orders for soymeal by poultry farmers who have been hit hard by bird flu.
Chicago wheat futures sank 11 to 12 cents per bushel lower as fund traders liquidated contracts on ideas of weak demand for US supplies.
A report that Egypt recently purchased nearly a quarter of a million tonnes from suppliers in the Black Sea was bearish for the market, as it means US supplies are still overpriced on the world market.
There is speculation that recent excess rain in the US Southern Plains could benefit the hard red winter wheat crop, even as other wheat varieties have been negatively affected. Conditions are also said to be improving for wheat crops in Canada and Russia, according to an analyst.
• Wheat farmers in Russia’s main southern growing area need rain by the end of this week if they are to match last year’s yields, according to a report.
• Ukraine will export nearly 33 million tonnes of grains in the 2014/15 season, analysts say.
• Bread and pizza makers in India will likely have to import more supplies this year as the country is likely heading to its smallest what harvest in seven years, a trader said.
Settlement prices are in Canadian dollars per metric ton.
