North American grain/oilseed review: Canola losses continue into weekend

By Phil Franz-Warkentin

Glacier FarmMedia MarketsFarm — The ICE Futures canola market moved lower for the fourth-straight session on Friday, retreating from overnight advances to hit its weakest levels in two months.

Chicago soyoil, European rapeseed and Malaysian palm oil futures were all weaker, which weighed on the Canadian oilseed.

Bearish technical signals contributed to the declines, as speculators were thought to be back adding to their large net short positions.

However, the underlying fundamentals remain supportive for canola and scale-down end user demand helped temper the declines. Weekly Canadian canola exports of 189,500 tonnes were down 28 per cent from the previous week, although crop year-to-date movement at 3.6 million tonnes was roughly double last year’s level.

There were an estimated 54,439 contracts traded on Friday, which compares with Thursday when 68,773 contracts traded. Spreading accounted for 32,374 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade recovered from early losses to post small gains on Friday, as recent weakness in the market was thought to be uncovering some end user buying interest.

The United States Department of Agriculture reported flash sales of 198,000 tonnes of soybeans to unknown destinations.

Profit-taking and a slowdown in export demand weighed heavily on palm oil Friday, with that selling pressure spilling into soyoil as well. However, soymeal was higher.

Relatively favourable crop conditions in Brazil remained a bearish influence, tempering any gains.

CORN traded within a few cents of unchanged, with the bias lower at the close.

Gains in crude oil provided underlying support for the ethanol-linked grain, as escalating tensions between Russia and Ukraine underpinned energy markets.

However, resulting strength in the U.S. dollar index was bearish for the grains and oilseeds making exports priced in U.S. dollars more expensive for international buyers.

WHEAT futures were lower, as traders adjusted positions ahead of the weekend. While the Russia/Ukraine conflict remained supportive, the U.S. dollar strength was bearish.

The U.S. dollar index was up by half a point late in the day, hitting its highest level in two years.

Rising production prospects out of Australia also pressured wheat values.