By Terryn Shiells and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, Feb. 4 – ICE Futures Canada canola contracts moved higher, following the sharp advances seen in the Chicago soybean complex on Tuesday.
Optimism that China will put off cancelling US soybean purchases and strong export demand for the US commodity helped to underpin both canola and soybean futures.
Further support came from oversold price sentiment and ideas that canola is undervalued compared to other oilseeds, analysts said.
However, the upswing in the value of the Canadian dollar helped to limit the gains, as did confirmation of large Canadian canola stocks.
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Statistics Canada reported Canadian canola stocks at 12.6 million tonnes as of December 31, 2013, which compares to 8.1 million on December 31, 2012.
Problems moving canola out of Western Canada and the resulting slower usage of supplies continued to overhang the market.
About 23,427 canola contracts were traded on Tuesday, which compares with Monday when 12,937 contracts changed hands. Spreading accounted for 21,236 of the trades.
Durum and barley futures were untraded and unchanged. Milling wheat prices were also untraded, though the exchange moved them up by C$5.00 per tonne after the close.
US Grain and Oilseed Review
Soybean futures at the Chicago Board of Trade settled one to 20 cents per bushel higher on Tuesday, boosted by good export demand and the fact that China has still not cancelled any previous purchases.
The USDA has inspected 15% more soybeans for export during the crop year to date compared to the same point last year, according to the most recent government data.
Favourable technical signals contributed to the gains, as the March soybean contract moved back above the psychological US$13.00 per bushel level.
However, good weather conditions for soybeans across most of South America did limit the upside potential. Private forecasters Informa released updated production estimates today, raising their estimate on the size of the Brazilian soybean crop by 1 million tonnes, to 89.7 million. The company pegged Argentina’s soybean crop at 57.0 million tonnes, which was down by 500,000 from a previous estimate.
Soyoil futures were 25 to 26 points higher on Tuesday, finding some support from the gains in soybeans. However, soyoil did lag the rest of the soy complex to the upside, with losses in Malaysian palm oil putting some pressure on values.
Soymeal futures were US$2.00 to US$13.00 higher on Tuesday, with good export demand behind some of the buying interest.
Corn futures in Chicago settled five to six cents per bushel higher on Tuesday, as reports of fresh export demand underpinned the market.
The US sold over 100,000 tonnes of corn to unknown destinations on Monday, and recent increases in US corn sales were seen as a sign that prices were looking more competitive in the global market, according to participants.
Informa lowered its estimate for Brazilian corn production to 66.5 million tonnes, which was down by a million tonnes from a previous estimate. The company pegged Argentina’s corn crop at 22.6 million tonnes, down by 2.4 million from the January estimate.
Minneapolis, Kansas City and Chicago wheat futures were all stronger on Tuesday, seeing some follow-through buying interest on Monday’s chart-based bounce. The Chicago and Kansas City winter wheat contracts posted gains of 20 to 22 US cents per bushel, while the Minneapolis spring wheat market lagged to the upside with gains of about 10 to 12 cents.
Concerns over dryness in some southern US winter wheat growing areas were also supportive, although heavy snowfall in the more northern reaches should aid yields there.
Confirmation of Canada’s large wheat stocks in a report from Statistics Canada did not come as a surprise. While Canadian wheat stocks of about 28.4 million tonnes, as of December 31, were almost eight million tonnes larger than the same point the previous year, some analysts had anticipated an even more burdensome supply situation.
• The US winter wheat crop ratings were lowered by the USDA in many major wheat producing states, including Texas, Oklahoma, Kansas, and Nebraska.
• Informa pegged Argentina’s wheat crop at 10 million tonnes, which was up by 200,000 tonnes from an earlier estimate.
Canadian canola settlement prices are in Canadian dollars per metric ton.
