By Dave Sims and Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, October 17 – THE ICE Futures Canada canola market posted large gains Monday in sympathy with the surging US soy complex.
Soyoil and European rapeseed futures were both sharply higher while Malaysian palm oil was also supportive.
Crush margins are still reasonably good while snow and rain held up the harvest in parts of Saskatchewan and Alberta.
Large commercial funds are starting to move out of the November contract and into January.
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“We believe the funds are going long which is adding to the momentum,” said a trader in Winnipeg. “They’re just establishing a long somewhere around 10,000 (contracts) and they’ve got room to add.”
However, expectations of a massive soybean crop in South America was another bearish factor along with uncertainty about how much canola China will buy this year.
Declines in crude oil were bearish for canola.
Around 43,496 canola contracts were traded on Monday, which compares with Friday when around 39,494 contracts changed hands. Spreading accounted for about 30,744 of the contracts traded.
Milling wheat, barley and durum were untraded.
Settlement prices are in Canadian dollars per metric tonne.
SOYBEAN futures at the Chicago Board of Trade were up by 11 to 16 cents per bushel on Monday, as speculative buying interest, gains in soyoil, and solid export demand all provided support.
Speculators are holding large net long positions in soybeans, and were reportedly adding to those positions on Monday.
Weekly export inspections of 2.5 million tonnes came in well above trade expectations, adding to the firmer tone.
However, US farmers continue to make good progress bringing in this year’s US soybean crop, with the harvested estimated to be about two-thirds complete.
SOYOIL futures were up on Monday, rising to their highest levels in six months. Tightening palm oil supplies, coupled with rising world demand for vegetable oil, were behind the strength.
SOYMEAL futures were up on Monday, taking some direction from soybeans and soyoil.
CORN futures in Chicago were narrowly mixed on Monday, with farmer selling on the one side countered by spillover from the rally in soybeans.
The US corn harvest is thought to be about half finished, and farmers are active sellers as supplies build in the countryside.
However, the large corn crop is already factored into the futures, and chart-based short covering provided some underlying support.
WHEAT futures in Chicago were up by two to three cents per bushel on Monday.
Chart-based buying was a feature in wheat, as the nearby technical signals have shifted higher, according to participants.
Rising world export demand was also underpinning the futures, although US wheat continues to miss out on sales opportunities when competing against cheaper Russian grain.
– Saudi Arabia purchased 600,000 tonnes of wheat in a tender over the weekend.
– Egypt, the world’s largest wheat importer, bought 120,000 tonnes from Romania and an additional 60,000 tonnes from Russia in its latest tender.
