Canola futures on the ICE Futures Canada trading platform managed to claw back some advances during the week ended July 8. Talk of some fresh export demand coming forward for Canadian canola helped to see values rebound up. Some concern about hot weather outlooks for the Prairies also encouraged some of the upward price momentum.
Strength in Chicago Board of Trade (CBOT) soybean and soy oil futures added to the friendly price tone experienced by canola, as did steady demand from the domestic processing sector.
The advances were kept in check by profit-taking and continued speculative liquidation fuelled by worries over the state of the U.S. economy.
A Canola Council of Canada crop update, indicating that three-quarters of the crops on the Prairies were developing well, also influenced some late-week weakness which prevented canola values from recovering further.
Western barley contracts on the ICE platform were ignored by the trade during the week. Cash bids for barley in Western Canada, meanwhile, experienced some easing as demand from the feedlot sector has been declining amid the turning out of the animals on pasture.
CBOT soybean values posted advances during the week ended July 8. Gains were associated with the strength displayed by CBOT corn futures and ongoing worries about poor growing conditions in the U.S. Midwest, which could result in lower soybean production.
Concerns about the U.S. economy, along with the absence of fresh demand from the export and domestic sectors, restricted the strength in soybeans. Speculation that U.S. soybean stocks are nowhere near as tight as some are suggesting, also was a factor in capping the upside price potential.
Corn futures at the CBOT posted sharp advances during the reporting period, with continued indications of strong export demand from China stimulating the upward price movement. Weather outlooks calling for extreme heat to stress the U.S. corn crop also influenced the gains exhibited by the commodity.
The triggering of buy-stop orders also aided the price advances seen in corn.
Wheat futures at the CBOT and Kansas City and Minneapolis exchanges also gyrated to higher ground during the week ended July 8. Much of the strength was linked to the uptrend experienced by CBOT corn values and to ongoing concerns about the weather for the harvest of the U.S. winter wheat crop and the slow start to the spring wheat crop in the northern-tier U.S. states.
The advances in U.S. wheat values were kept in check by news that wheat output in the Black Sea region will be higher than anticipated, and that those Russian and Ukrainian wheat supplies will soon be grabbing export business away from the U.S.
The market analysis branch of Agriculture and Agri-Food Canada released updated supply/ demand tables during the week, with the numbers for barley certainly worth a mention or two. The most interesting aspect of the data was the ending stocks outlook for Canadian barley in 2011-12.
AAFC forecast Canadian barley ending stocks at an impossibly tight 500,000 tonnes compared with the 800,000 forecast roughly a month back. Ending stocks of barley in 2010-11 were also lowered to 1.05 million tonnes from their earlier projection of 1.256 million.
Industry contacts feel there is absolutely “no way” barley stocks in Canada at the end of the 2011-12 crop year will be allowed to be pushed down to virtually nothing, which is what the latest estimate represents. They felt that some major rationing of barley, or some major seeking out of alternative supplies, will occur before that projection becomes a reality.
Meanwhile, Canadian durum shipments to the U.S. are looking up. U.S. processors may be looking to Canada to help meet supply requirements, given news this week that U.S. durum area is much lower than it was a year ago. The U.S. Department of Agriculture in a report pegged U.S. durum area at only 1.7 million acres, which compares with 2010 acreage of 2.6 million. There are concerns that actual U.S. durum seedings may even be lower, given all the issues at seeding time in the main durumproducing state, North Dakota. Some participants were of the belief that 50 per cent of the intended durum area in North Dakota did not get seed into the ground.
Current cash bids for top-quality milling durum in North Dakota, based on a September delivery, are around the US$15.25-per-bushel level, indicating that end-users anticipate a pretty small harvest.
Dwayne Klassen and Brent Harder write for Commodity News Service Canada, a Winnipeg company specializing in grain and
commodity market reporting.