By Terryn Shiells and Phil Franz-Warkentin, Commodity News Service Canada
WINNIPEG – ICE Futures Canada canola contracts closed sharply higher on Friday, with light trade volumes helping to exaggerate the advances, analysts said.
Spillover support came from the gains seen in Chicago soyoil futures and nearby soybean contracts, with slow farmer selling also underpinning the market. Traders noted that farmers were more interested in forward pricing, which meant less old crop supplies in the cash pipeline.
Steady commercial demand and worries about possible planting delays due to cold weather in Canada and the northern United States further lifted prices.
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Weakness in the value of the Canadian dollar and ideas that canola is still cheap compared to other oilseeds were also bullish.
However, spillover from the losses seen in new crop soybeans tempered the gains, as did expectations of a large 2013/14 Canadian canola carryout.
Positioning ahead of Monday’s Statistics Canada stocks report, which will show supplies of Canadian crops as of March 31, 2014, was a feature of the activity. The burdensome Canadian canola supply situation is expected to be confirmed in the report.
About 17,095 canola contracts were traded on Friday, which compares with Thursday when 12,189 contracts changed hands. Spreading accounted for 9,880 of the trades.
Milling wheat, durum and barley futures were untraded following price revisions after the close on Thursday.
SOYBEAN futures at the Chicago Board of Trade were mixed on Friday, with gains in the front months and losses in the new crop positions.
Tight old crop supplies remained a supportive influence on soybeans, according to traders. Ideas that yesterday’s losses were overdone also helped soybeans see a modest corrective bounce.
However, forecasts calling for relatively favourable planting conditions across the Midwest in the next week were somewhat bearish.
SOYOIL futures were up on Friday, amid ideas that yesterday’s losses were overdone. Adjustments to the soyoil/meal spread also favoured soyoil on Friday.
SOYMEAL futures were mixed on Friday, tracking soybeans with gains in the nearby contracts and losses farther out.
CORN futures in Chicago were down five to nine cents per bushel on Friday, as the improving seeding weather across the US Midwest weighed on values.
Forecasts calling for warmer and drier conditions across much of the Midwest, with only sporadic shower activity, should allow farmers in the region to move forward with spring seeding over the next week, according to participants.
On the other side, good export demand did provide some underlying support. The USDA reported fresh export sales of over 100,000 tonnes to unknown destinations Friday morning.
WHEAT futures in Chicago settled seven to nine cents per bushel higher on Friday, as the drought worries in the southern plains continued to underpin the wheat market. Kansas City futures were up by as much as 25 cents, while Minnesota futures were 10 to 14 cents higher.
An annual wheat tour of Kansas pegged average wheat yields in the state at 33.2 bushels per acre, which would be the smallest yield in the major wheat producing state since 2007.
Relatively favourable crop prospects for wheat crops elsewhere in the world weighed on values, limiting the gains.
• Private forecasters Informa Economics estimated total US winter wheat production at 1.496 billion bushels, ahead of a USDA report out May 9. That would be down by 38 million bushels from the previous year.
• Saudi Arabia tendered to purchase 550,000 tonnes of optional origin wheat. Egypt also tendered to make large purchases, but the US was unlikely to factor into either of those tenders.
