By Terryn Shiells and Phil Franz-Warkentin, Commodity News Service Canada
WINNIPEG, Sept 23 – ICE Futures Canada canola contracts were firmer on Tuesday, finding some spillover support from the gains seen in Chicago soyoil futures, analysts said.
Weakness in the value of the Canadian dollar added to the bullish tone, as it made canola more attractive to crushers and exporters.
Ideas that prices dropped too far, too fast over the past few days also sparked some short covering in the market.
Steady demand for canola further underpinned prices, as did some uncertainty surrounding the size of the 2014/15 Canadian crop.
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However, pressure from the advancing Canadian harvest, as weather conditions are excellent this week, weighed on the market, as did the resulting pick up in farmer selling.
Weakness in CBOT soybean futures, and ongoing expectations for record large soybean supplies out of the US, were also bearish.
About 23,772 contracts traded on Tuesday, which compares with Monday when 40,648 contracts changed hands. Almost all of the activity was spread related.
Milling wheat, durum and barley futures were untraded, though the Exchange moved wheat prices slightly lower after Tuesday’s close.
SOYBEAN futures at the Chicago Board of Trade were narrowly mixed on Tuesday, although the bias was lower in all of the most active months.
The latest weekly USDA crop report showed a slight one percentage point dip in soybean ratings, with 71% now rated good-to-excellent. The decline did provide some support to the futures in early activity, but the market was unable to hold onto those gains.
Weather conditions remain favourable across the Midwest for both early harvest operations and the development of later-maturing fields. Yield results continue to beat expectations as well.
Ideas that US farmers will plant even more soybeans next year, as the oilseed offers better returns compared to corn, added to the weaker tone.
Bearish technical signals contributed to the declines, according to participants. However, scale-down end user demand and ideas that the market was starting to look oversold were supportive.
SOYOIL futures were up on Tuesday, as adjustments to the oil/meal spread favoured the oil side of the equation. Fresh export demand was also supportive.
SOYMEAL futures were down on Tuesday, following soybeans.
CORN futures in Chicago were down one to two cents per bushel on Tuesday, as good Midwestern weather and the record production prospects continued to weigh on values.
Condition ratings for the US corn crop held steady over the past week, with 74% still hitting the good-to-excellent mark in the latest USDA report. Early yield reports are also beating expectations as harvest operations pick up speed.
Scale-down end user demand and oversold price sentiment did provide some underlying support.
WHEAT futures in Chicago settled with small losses on Tuesday, as the large global supply situation continued to weigh on values.
With ample supplies available from many other countries, US wheat prices will need to stay competitive in order to generate export business, said participants.
• The US spring wheat crop was 86% harvested as of September 21, which was up 12 percentage points from the previous week, according to the weekly USDA report. Winter wheat seedings were also moving forward in the country, with 25% of intended acres in the ground – from 12% the previous week.
• Wheat area in Argentina could be down by 10% due to flooding in the country, according to industry data from the South American country.
• Bulgaria will export over 2 million tonnes of wheat in 2014, despite a decline in yields, according to an agricultural official in the country. Total production in the country was forecast at 4 million tonnes, with 1.8 million to 2.0 million tonnes slated for domestic consumption.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
