North American grain/oilseeds review: canola, soybeans down sharply after bearish USDA report
By Terryn Shiells and Dave Sims, Commodity News Service Canada
WINNIPEG – ICE Futures Canada canola contracts ended sharply lower on Monday, following the losses in Chicago soybeans and soyoil after the release of a bearish USDA report on Monday morning, analysts said.
The USDA said that farmers planted a record amount of 84.8 million acres of soybeans this spring, which was above last year’s 76.5 million and average trade guess of 82.2 million acres. Stockpiles as of June 1, 2014 were also higher than expected at 405 million bushels.
Recent strength in the value of the Canadian dollar and reports of good growing conditions for the US soybean crop added to the bearish tone.
However, slow farmer selling, paired with steady demand helped to limit the losses.
Concerns about flood damage seen in parts of Western Canada over the weekend were also supportive. One broker estimated that 12 to 15 per cent of total Prairie production has been lost to unseeded and flooded acres because of excess moisture this spring.
About 25,393 contracts traded on Monday, which compares with Friday when 16,712 contracts changed hands. Spreading accounted for 10,042 of the trades made.
Milling wheat, durum and barley futures were untraded, though the Exchange moved wheat prices lower after Monday’s close.
CORN futures in Chicago sank to a four-month low on government estimates that domestic corn stockpiles were nearly 40 percent higher than last year at the same time.
Prices were down anywhere from 15 to 23 cents per bushel on the Chicago Board of Trade.
According to the USDA report, domestic corn supplies totalled 3.85 billion bushels as of June 1. This exceeds initial forecasts of 3.71 billion bushels.
Farmers are estimated to have planted 91.6 million acres of corn this spring which is lower than the previous four years. However, favourable weather conditions are leading analysts to believe production could surpass last year’s.
SOYBEAN futures at the Chicago Board of Trade plummeted Monday, falling 31 to 72 cents per bushel, after the USDA released its acreage report which showed larger estimated supplies of soybeans than initially thought.
According to the report, farmers in the US will plant a record 85 million acres this year, higher than previous estimates of 82 million acres.
Planting conditions were said to be “much improved” compared to a year earlier.
Soybean stocks from last year’s harvest were pegged at 405 million bushels as of June 1, which exceeded expectations.
SOYOIL futures were sharply lower following soybeans.
SOYMEAL futures were lower after the bearish USDA report.
WHEAT futures in Chicago also fell sharply Monday, falling 12 to 20 cents per bushel and 15 to 21 cents per bushel on the Kansas City Board of Trade as the USDA’s estimates for planted acres exceeded previous projections.
The USDA estimates US farmers planted 56.47 million acres, topping previous estimates of 55.82 million acres.
However, inventories of US wheat in storage were pegged at around 590 million bushels, this is less than the 603 million bushels analysts had previously estimated, giving values some support.
• Wheat purchases on Egypt’s domestic market were extended by 10 days, according to the country’s agricultural wing. The government intends to purchase 4 million tonnes.
• China is planning to develop 53.3 million hectares of drought/flood resistant farmland in a bid to protect domestic wheat crops and other supplies, according to a report.
• Indonesia is moving forward with a plan to cut its 20 percent import tariff on wheat flour next month in favour of a quota system, an analyst said.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
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