By Phil Franz-Warkentin
Glacier FarmMedia MarketsFarm – The ICE Futures canola market was stronger on Tuesday, hitting its highest levels in two-and-a-half months.
Chart-based positioning was a feature, as values moved above some key moving averages and speculators covered some of their record large short positions in canola. Talk of increased Chinese demand was also supportive, although other end users were thought to be keeping to the sidelines.
Chicago soyoil, European rapeseed and Malaysian palm oil futures were all stronger on Tuesday, providing spillover support to the Canadian oilseed.
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However, some technical signals were starting to look overbought, which could temper the upside going forward, according to an analyst.
There were an estimated 44,542 contracts traded on Tuesday, which compares with Monday when 55,174 contracts traded. Spreading accounted for 19,508 of the contracts traded.
SOYBEAN futures at the Chicago Board of Trade were stronger on Tuesday, underpinned by bullish chart signals and declining South American production estimates.
Brazil’s Conab lowered their call on the country’s soybean crop to 146.9 million tonnes, down by 2.5 million from their last estimate and well short of the United States Department of Agriculture’s 155 million-tonne projection.
Speculative short covering contributed to the gains in soybeans, with prices moving above some key technical levels. The May contract settled above its 40-day moving average for the first time in three months.
CORN was also underpinned by short covering and the latest crop estimates out of Brazil, but ran into resistance to close unchanged on the day in most contracts.
Conab dropped their Brazilian corn production estimate by a million tonnes, now at 112.7 million. That compares with the USDA’s estimate of 124 million tonnes.
WHEAT was narrowly mixed. Competition from cheaper Russian wheat continued to weigh on the U.S. wheat market, with Russian wheat exports through the Black Sea moving at a solid pace.
Condition ratings for U.S. winter wheat were holding relatively steady, with 53 per cent of the wheat in Kansas in the good-to-excellent category and 65 per cent in Oklahoma. Condition ratings improved one point in Texas, now at 44 per cent good-to-excellent.
After announcing several cancellations over the past few sessions there were no fresh cancellations of previously announced sales of soft red winter wheat to China on Tuesday.
