By Terryn Shiells and Marney Blunt, Commodity News Service Canada
WINNIPEG, Aug 26 – ICE Futures Canada canola contracts ended higher on Tuesday, lifted by concerns about cold temperatures and frost possibly causing damage to canola crops in some parts of the Prairies overnight.
Temperatures dropped close to freezing in parts of Manitoba and Saskatchewan last night, though high humidity likely prevented any significant damage, analysts said.
Sentiment that the market is oversold was supportive for canola, as was the firmer tone in Chicago soyoil futures.
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However, weakness in Malaysian palm oil and European rapeseed values spilled over to weigh on canola.
The upswing in the value of the Canadian dollar and ongoing expectations of a record large US soybean crop were also bearish.
About 20,378 contracts traded on Tuesday, which compares with Monday when 13,565 contracts changed hands. Spreading accounted for 15,346 of the trades.
Milling wheat, durum and barley futures were untraded, though the Exchange adjusted wheat prices following Tuesday’s close.
SOYBEAN futures in Chicago were mixed on Tuesday as traders stated to buy after reaching their lowest intraday price for a four-month contract in almost four years on Tuesday. The September contract is nearing expiration, which is spurring investors to close out their positions.
Friday is the first-notice day, when investors who had bought contracts betting on a rising price trend may be required to take delivery of the soybeans, depending upon the terms of their original transaction. To avoid taking delivery, contract holders must sell and either liquidate their position or roll their investment into a future month, analysts say.
September contracts expire on September 12. Most soybean contracts traded on commodity exchanges don’t end in delivery of the underlying product, traders say.
Many investors are reportedly selling their September futures contracts with the first-notice day nearing, even though domestic demand for soybeans remains strong.
Prices were kept under downward pressure from beneficial rainfall for crops in the U.S. Midwest, particularly in areas that have been fairly dry in the past 30 days. As much as one and a half inches of rain fell in northern Iowa on Monday, according to the National Weather Service.
Demand for soybeans remains strong with cash prices in some parts of the country over US$3 over the November futures contract, an unusually high premium, traders say.
SOYOIL futures in Chicago closed higher on Tuesday.
SOYMEAL futures closed lower on Tuesday, keeping the spread with soybean oil.
CORN futures in Chicago fell on Tuesday to their lowest price in two weeks, also due to investors selling September contracts as well as continued rainfall in parts of the U.S. Midwest, brokers say.
Outside markets are neutral to slightly friendly, but soybean action is pulling corn lower along with a market bias toward a big crop that may still be increasing, traders say.
Ethanol markets remain strong in the near term, with basis levels staying firm. The U.S. Department of Agriculture announced that 120,000 metric tonnes of corn sold to Colombia, and 113,673 to Costa Rica. The weekly crop progress report rated corn as 73 per cent good to excellent condition, with seven per cent poor to very poor.
WHEAT futures in Chicago were mixed on Tuesday, amid easing geopolitical tensions between Russia and Ukraine, giving investors the idea that the region’s grain trade will not be disrupted by the violence, analysts say. Both Russia and Ukraine are large exporters of wheat.
The U.S. dollar was also up on the day, which continues to work against U.S. exports and domestic prices, traders say.
Precipitation in certain areas is slowing the spring wheat harvest, which in turn causes quality concerns for the higher protein classes of wheat.
The weekly crop report states that spring wheat conditions were rated as 66 per cent good to excellent, and harvest was 27 per cent complete, in comparison with the average of 49 per cent complete.
– Despite heavy purchases in recent months of mainly Ukrainian and Russian supplies, private buyers in Pakistan are still in need of more wheat imports after a disappointing local harvest, traders said.
– Japan is going to be trimming the price of imported wheat to domestic millers from October by an average of 0.4 per cent from the previous six-month period after international prices for wheat fell amid rising global stockpiles.
– An agricultural economist, Dr. Baba Bashir, has confirmed that Nigerian wheat could compete favourably in the international market with wheat crops from other countries.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
