Canola withstanding price slides of other crops

Canola futures posted modest gains today, amid sideways trading for soybeans, corn, wheat and oats. March canola in Winnipeg closed at $596.60 per tonne, up $11.00 from Thursday.

Meanwhile, March soybeans gained four cents to finish at $14.18 per bushel.

Overall, in the month of December canola prices have held up relative to other commodities. Canola futures began December trading around $600 a tonne. As of Dec. 28 March futures were only a few dollars under that benchmark.

Meanwhile, March soybeans lost more than 30 cents in the last 28 days, falling from $14.50 a bu. at the beginning of December.

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December has been harder on grains, as wheat and corn tumbled the last four weeks. Minneapolis wheat sat at $9.40 per bu. Dec. 1 and it closed Friday under $8.70, a decline of 70 cents.

Nearby corn futures also suffered significant losses in December, going from $7.50 per bu. early in December to close Friday at $6.94 per bu.

Canola prices have remained relatively strong, likely because supplies are tight. In its outlook for principal field crops released Dec. 19, Agriculture Canada estimated that global canola production would drop three percent to 59 million tonnes in 2012-13, compared to the previous year, because of production problems in Canada and the European Union.

For example, Canadian production in 2012 was 13.3 million tonnes, a decline of nine percent relative to 2011. Tight supplies combined with moderate declines in demand should bolster prices into the 2013-14 crop year, Ag Canada said.

As for grains, traders attributed the recent decline in U.S. wheat and corn prices to weak export demand during December. Even a bullish U.S. Department of Agriculture report today on wheat exports, for the week ending Dec. 20, failed to kick start U.S. wheat prices. The USDA reported exports of one million metric tonnes for the week — the highest weekly total in nearly two years.

Yet, Minneapolis wheat only gained three cents to close at $8.6775 per bu. March wheat futures in Chicago made more headway, gaining 6.5 cents to finish at $7.7875.

Looking ahead, analysts expect U.S. wheat is now priced competitively for export sales, which should provide market strength in the short term.

Winnipeg (per tonne)

Canola Jan 13 $605.20, up $13.90

Canola March 13 $596.60, up $11.00

Canola May 13 $591.50, up $10.30

Canola July 13 $587.60, up $9.80

Milling Wheat March 13 $290.50, unchanged

Milling Wheat May 13 $293.50, unchanged

Milling Wheat July 13 $295.50, unchanged

Durum Wheat March 13 $312.40, unchanged

Durum Wheat May 13 $316.40, unchanged

Durum Wheat July 13 $319.40, unchanged