By Phil Franz-Warkentin, MarketsFarm
WINNIPEG, Jan. 5 (MarketsFarm) – The ICE Futures canola market was stronger on Tuesday, with new highs in the old crop contracts as a rally in the Chicago Board of Trade soy complex provided direction.
The most active March contract briefly traded above the psychological C$650 per tonne level, but ran into resistance at the highs.
South American production concerns and general weakness in the United States dollar accounted for much of the strength in soybeans and soyoil, which spilled into canola.
However, the Canadian dollar was up sharply relative to its U.S. counterpart, nearing 79 U.S. cents. The firm currency tempered the upside in canola.
Scale-up farmer hedges and ideas canola was looking overbought also slowed the advances.
About 34,822 canola contracts traded on Tuesday, which compares with Monday when 30,177 contracts changed hands. Spreading accounted for 20,858 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade were up sharply on Tuesday, testing fresh six-and-a-half year highs as forecasters continue to lower their South American crop projections.
Chart-based buying was a feature, with some stops likely hit on the way up.
In addition to the South American weather worries and activity in the currency markets, soybeans also found support from solid domestic demand.
The latest crushing data from the United States Department of Agriculture showed that 191 million bushels of soybeans were processed in the country in November. That was down from the all time record in October, but still a record for the month of November and a 9.4% increase compared to the previous year.
CORN was up in sympathy with soybeans, as the grain has some catching up to do in order to encourage acres this spring.
Dryness in South America was also supportive for corn.
WHEAT futures were up on the day, with weakness in the U.S. dollar making the country’s wheat more attractive on the global market.
Condition ratings for U.S. winter wheat as of the end of December showed improvements many of the major wheat growing states, with Kansas now at 47 per cent good to excellent from 33 per cent the previous month.