By Phil Franz-Warkentin and Jade Markus, Commodity News Service Canada
Winnipeg, Jan. 12 – ICE Futures Canada canola contracts posted solid gains at Tuesday’s close, as a rally in CBOT soybeans spilled over to provide support.
After trading to both sides of unchanged in early activity, canola eventually turned higher following the release of a number of USDA reports. The much anticipated data included downward revisions to the US soybean production and ending stocks estimates, which the market “interpreted as bullish; or not bearish anyway,” according to a trader.
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Ongoing weakness in the Canadian dollar, which dipped below 70 US cents at one point, contributed to the turn higher in canola as the softer currency was keeping exporters and domestic crushers on the buy side, according to participants.
However, ample supplies in Western Canada, and generally bearish technical signals did limit the advances.
About 21,812 canola contracts were traded on Tuesday, which compares with Monday when 10,123 contracts changed hands. Spreading accounted for about 5,098 of the contracts traded.
Milling wheat, durum, and barley futures were all untraded.
SOYBEAN futures at the Chicago Board of Trade closed ten to 13 cents per bushel stronger on Tuesday, as the United States Department of Agriculture (USDA) slightly reduced its soybean stock estimates.
US soybean inventories at the end of the 2015-16 season are estimated at 440 million bushels, compared with the 465 million projected in December.
The USDA lowered its global production estimate as reduced production in the US and South Africa offsets higher production in China.
The USDA also expects higher crush margins, while stronger exports added to the bullish tone.
SOYOIL prices settled lower on Tuesday, tracking Malaysian palm oil.
SOYMEAL closed higher on Tuesday, following gains in nearby grain and oilseed markets.
CORN futures closed three-and-a-half to five cents per bushel stronger on Tuesday, gathering spill over support from the wheat market, despite raised projections from the USDA.
US corn production will likely be the third-largest on record, according to USDA data, totalling 13.601 billion bushels with yields of 168.4 bushels an acre.
WHEAT closed ten to 12 cents per bushel stronger on Tuesday, despite larger domestic stocks projected by the USDA.
US wheat reserves are expected to hit 941 million bushels next spring, up from the 911 million bushels projected in December, according to the USDA.
Winter wheat seeding data created most of the bullish gains in the wheat market.
The USDA expects farmers only planted 36.7 million acres of winter wheat, down from 39.5 million the previous year.
– Brazil’s domestic wheat crop is poor quality, according to reports, and the country is waiting for supplies from Argentina.
– US winter wheat crops are under threat from yellow rust, according to reports.
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