By Terryn Shiells and Marney Blunt, Commodity News Service Canada
WINNIPEG, August 5 – ICE Futures Canada canola contracts ended sharply higher on Tuesday, after the market rallied just before the close.
Canola was catching up with Monday’s sharp gains in soybeans, as Canadian markets were closed, analysts said. Though, some downward pressure came from the weakness seen in soybeans and soyoil on Tuesday.
The sharp downswing in the value of the Canadian dollar, which dropped about a third of a cent against the US dollar, was bullish. The softer Canadian currency makes canola more attractive to crushers and foreign buyers.
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A lack of significant farmer selling in Western Canada, as they wait for better prices and more confidence in their new crop was also supportive, as was strong demand for the commodity.
However, forecasts calling for better weather in Western Canada this week were bearish, as were ideas that the Canadian canola crop is looking bigger than it did a month ago.
About 18,538 contracts traded on Tuesday, which compares with Friday, when 15,862 contracts changed hands. Spreading was a large feature of the activity, accounting for 14,056 of the trades.
Milling wheat, durum and barley futures were untraded, though wheat prices were moved higher following Tuesday’s close.
SOYBEAN futures in Chicago dropped on Tuesday after the U.S. Department of Agriculture (USDA) unexpectedly left crop ratings unchanged in a Monday report, analysts say.
Approximately 71 per cent of U.S. soybeans were in good or excellent condition as of Sunday, unchanged from a week earlier, according to the USDA. Analysts had expected ratings to decline after a week of dry weather in the U.S. Midwest.
Data out of China indicated a weaker than expected look at the service sector and the lowest on record, which pressured the Shanghai Composite marginally lower, traders say.
Private estimates calling for a record large 2014/15 US soybean crop ahead of next Tuesday’s USDA report added to the bearish tone.
SOYOIL futures in Chicago were lower on Tuesday.
SOYMEAL futures closed lower on Tuesday.
CORN futures in Chicago dropped on Tuesday as more rain is forecast for the Midwest this week after as much as four inches fell on Monday, relieving dry conditions from the past week, brokers say.
Crop ratings dropped to 73 per cent as good or excellent, which was down two per cent from the prior week, according to the USDA.
The market experienced some increased position-squaring ahead of the USDA report that is scheduled to be released August 12. Traders were looking for a decline between one to two per cent for the crop conditions update rated as good or excellent, which fell right in-line with the report results.
WHEAT futures in Chicago rose on Tuesday, despite speculation that rainfall in parts of the U.S. southern Great Plains improved soil conditions ahead of winter planting, which usually begins next month, traders say.
As much as three times the normal amounts of precipitation have fallen in the region in the past 90 days, according to the National Weather Service.
Signs of improving export demand for U.S. wheat and worries about unfavourable conditions in France were supportive.
However, favourable spring wheat condition ratings and risk of an increase in the Russian wheat crop for the August 12 USDA report may keep sellers active on strong market rallies, brokers say.
• Wheat planting in Argentina reached 91.3 per cent of a surface of 10.3 million acres last week, as estimated by the Buenos Aires Cereal Exchange.
• A portion of the French wheat crop has been damaged due to repeated rain, which is also threatening to hurt crop quality in Germany and Poland.
• Russia is expected to harvest 58.5 million tonnes of wheat is 2014, its largest wheat crop in six years, according to IKAR, a Russian agriculture consultancy.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
