By Terryn Shiells and Dave Sims, Commodity News Service Canada
WINNIPEG, July 11 – ICE Futures Canada canola contracts ended sharply lower on Friday, following the Chicago soy complex after the release of a bearish USDA report, analysts said.
The USDA pegged US and world ending stocks of soybeans at very large levels for 2014/15, which caused oilseed prices to move lower on Friday. US ending stocks in 2014/15 were pegged at 415 million bushels, while world stocks were pegged at 85.3 million tonnes. In June, the USDA estimated world stocks at 82.88 million tonnes and US carryout at 325 million bushels.
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Chart-based selling after the market tested and broke below support at C$440 per tonne in the November contract added to the bearish tone.
Fading demand for canola, as it is no longer cheap compared to other oilseeds, further undermined the market, as did reports of good growing conditions for the US soybean crop.
However, slow farmer selling, along with ongoing worries about flood damage in Western Canada helped to limit the declines. The sharply weaker Canadian dollar was also supportive.
About 15,826 contracts traded on Friday, which compares with Thursday when 13,378 contracts changed hands.
Milling wheat, durum and barley futures were untraded, though wheat prices were adjusted lower after Friday’s close.
SOYBEAN futures at the Chicago Board of Trade plunged 13 to 37 cents per bushel lower Friday, as the USDA projected a bigger-than-expected harvest and stockpile for the oilseed.
The USDA says US soybean output will increase to 3.8 billion bushels with yields of 45.2 bushels an acre in 2014/15. This compares to the USDA’s earlier projections of 3.6 billion bushels and pre-report estimates of 3.7 billion bushels. In 2013, the US soybean crop was just less than 3.3 billion bushels.
According to the World Agricultural Supply and Demand Estimates, the good weather crops have been enjoying will lead to large jumps in crop production.
Ending stocks for 2013/14 will hit 140 million bushels by the end of August, which also exceeds pre-reported estimates of around 130 million. In June, the USDA pegged ending stocks at 125 million bushels for 2013/14.
Seed makers are being warned by analysts not to expect as many orders for seeds or fertilizer due to an expected decrease in farmer cash.
SOYOIL futures were down following soybeans and weakness in Malaysian palm oil futures, traders said.
SOYMEAL futures were lower, reacting to the bearish USDA report.
CORN futures in Chicago dropped to their lowest level in four years Friday on the USDA’s prediction that US inventories would exceeded earlier estimates. Values settled three to eight cents per bushel below unchanged. Stockpiles at the end of the 2014/15 season are expected to be 1.8 billion bushels. That compares to the USDA’s earlier estimate of 1.7 billion, and pre-report estimates of 1.8 billion.
Industry watchers with the cattle sector warn herd numbers are falling in the US due to production issues and feed use might begin to weaken, which would further pressure corn values.
The weather in the Midwest is staying mostly favourable. At this stage, shifts in the weather pattern might not mean very much as the current crop is too far along for much damage to occur, according to an analyst.
Global stockpiles, as of August 31, 2013 are being pegged at 173.4 million metric tonnes, which exceeds the previous estimate of 169.1 million metric tonnes and pre-report estimates of 170.1 million tonnes. Ending stocks will be healthy world-wide, said a trade advisor.
WHEAT futures in Chicago were 20 to 22 cents per bushel lower and nine to 12 cents per bushel lower on the Kansas City Board of Trade as US wheat production projections topped previous estimates. The new forecast calls for US wheat production to hit 1.992 billion bushels, slightly higher than the pre-report estimate of 1.972 billion bushels.
World wheat inventories at the end of the 2014/15 year are expected to total 189.5 million metric tonnes, up from trade guesses of 188.6 million metric tonnes.
Wheat could fall further to the downside in sympathy with corn, said an analyst.
• Prospects are improving in Western Australia for the wheat 2014 crop in 2014. One grower in the eastern Wheat belt says it’s the best start to the season in ten years, according to a report.
• Wheat millers in Indonesia, the world’s fourth most populated country, have decided to temporarily put off buying wheat in the hopes global prices drop even lower. Some analysts feel this trend could pick up around the globe.
• Experts are warning climate change is threatening to broaden the level of rust disease being felt in many grain-growing nations in the near future. Wheat stripe rust destroyed 40% of wheat crops in West Asia in 2010.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
