By Phil Franz-Warkentin, MarketsFarm
WINNIPEG, March 18 (MarketsFarm) – The ICE Futures canola market was stronger on Wednesday, as a sharp drop in the Canadian dollar provided support and COVID-19 concerns led to volatility in the global markets.
The Canadian dollar lost nearly two cents relative to its United States counterpart, moving below 69 U.S. cents to trade at its weakest levels since 2003. The soft currency helps underpin crush margins and should make canola more attractive to international buyers.
However, most of the activity on Wednesday was linked to speculators squaring positions and moving to the sidelines amid the uncertainty of the global COVID-19 pandemic, with no fresh business taking place in the current environment, according to a broker.
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Chicago Board of Trade soyoil futures were weaker, putting some pressure on canola.
About 20,203 canola contracts traded on Wednesday, which compares with Tuesday when 28,985 contracts changed hands. Spreading accounted for 12,028 of the contracts traded.
SOYBEANS at the Chicago Board of Trade moved to both sides of unchanged on Wednesday settling with small gains in the most active months. Advances in soymeal and losses in soyoil pulled at the market in opposite directions.
Ideas that declining ethanol production will lead to reduced supplies of distillers dried grains (DDGS) and tip some livestock feeding demand over to meal accounted for some of the buying interest in the bean market. Meanwhile, sharp losses in crude oil weighed on vegetable oil markets, including soyoil.
However, advances in the United States dollar index, as investors repatriate their money in the face of the global pandemic, kept a bearish tone in the market.
Expectations for increased US soybean and corn seedings this spring also weighed on values. The USDA is set to release its prospective plantings report on March 31, with pre-report expectations increases in both crops after excessive spring moisture left some fields unplanted last year.
CORN futures were weaker on Wednesday. With crude oil down another US$4 to US$5 per barrel, expectations that U.S. ethanol plants will slash production or even close weighed heavily on the key feedstock for the renewable fuel.
The strong U.S. dollar and expectations for increased U.S. acres this year also weighed on prices.
WHEAT futures were mostly higher, with both Chicago and Kansas City contracts posting solid gains. Traders playing the corn/wheat spread by buying wheat while they sold corn were behind some of the activity. End user bargain hunting was also supportive.
However, Minneapolis spring wheat settled narrowly mixed.
