Chicago Soybeans Put Pressure On Winnipeg Canola

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Canola futures on the ICE Futures Canada trading platform lost ground during the week ended Nov. 11. Much of the price weakness was associated with the downward price action experienced in the CBOT (Chicago Board of Trade) soybean complex and with the unsettled ongoing macroeconomic picture.

Keeping a firm floor under canola was steady demand from commercials, which was said to be covering the extensive list of vessels arriving at West Coast export terminals for previously conducted business.

Supplies of canola on the Canadian Prairies have been described as tight, with elevator companies offering premiums at a number of locations to entice farmers to unlock bins and deliver.

Steady demand from the domestic processing industry also helped to keep a floor under canola, with the pullback in the value of the Canadian dollar also an underpinning price influence.

Western barley futures on the ICE Futures Canada platform managed a small advance during the week, with ICE arbitrarily adjusting values upward. No volumes were reported. Cash bids for feed barley, meanwhile, held steady at firm

price levels. Slow farmer sales of feed barley and increased demand from feedlots provided support to the cash sector.

CBOT soybean futures experienced some fairly large losses during the week ended Nov. 11. Much of the downward price action was related to a complete lack of demand for the commodity on the global export market. Market participants continue to suggest values are too highly priced on the international scene to stimulate any kind of demand.

Some underlying support in soybeans came from firmness in the cash market and from the USDA report which showed U.S. supplies were on the tighter side.

News late in the week that China was seeking soybeans from either the U.S. or South America helped to curb some of the price weakness.

CBOT corn futures posted declines, tied to sentiment that U.S. corn values were overpriced and needed to drop in order to stimulate some fresh demand from the export and domestic sectors. The unsettled macroeconomic situation was also an undermining price influence.

The reluctance of U.S. producers to deliver corn into the cash pipeline and the resulting firmness in the cash market restricted some of the selling interest.

Support in Minneapolis

Wheat futures at the Chicago and Kansas City exchanges moved lower during the reporting period, while Minneapolis values were able to post small advances.

Ample global wheat supplies, and the cheap availability of wheat from the Black Sea region, encouraged the bearish price trend seen in CBOT and KCBT wheat contracts. The declines in KCBT wheat futures were tempered by concerns about the dry conditions that continue to persist in the U.S. winter wheat belt.

The drop in spring wheat production in the northern-tier U.S. states and the lack of farmer selling generated the support seen in MGEX wheat values.

The USDA report released during the week was neutral to bearish for U.S. soybeans, with the bearish aspect of statistics tied to global projections.

USDA pegged U.S. soybean production at 3.046 billion bushels, which was in line with pre-report expectations. Ending stocks for the 2011-12 crop year were estimated at 195 million bushels, up from the 160 million forecast the previous month, but still lower than the 215 million at the same time a year ago. Market projections had called for U.S. soybean ending stocks to be closer to 180 million bushels. World ending stocks for soybeans for the 2011-12 season came in at 63.56 million tonnes, which was up from the monthago projection of 63.01 million. Last year at this time, world soybean ending stocks totalled 68.37 million tonnes.

USDA estimated U.S. corn output at 12.31 billion bushels, down from the previous month s forecast of 12.187 billion and below most pre-report trade expectations. While the production number was friendly, the reduced feed usage in the statistics came in as a bit of a surprise. With the lower usage, U.S. corn ending stocks came in at 843 million bushels, which was above trade projections and compares with the month-ago level of 866 million. World corn ending stocks were adjusted lower by USDA to 121.57 million tonnes from 123.1 million and 129.04 million at the same time a year ago.

USDA pegged U.S. wheat ending stocks at 828 million bushels. This was down from the monthago forecast of 837 million bushels but was up from the year-ago level of 817 million. World 2011- 12 wheat ending stocks were put at 202.6 million tonnes. This was up fractionally from the monthago projection of 202.4 million tonnes and the largest projected global wheat supply in a decade.

Canada, a Winnipeg company specializing in grain and commodity market reporting.

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For three-times-daily market reports from Commodity News Service Canada, visit ICE Futures Canada updates at www.manitobacooperator.ca.

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