Canola and other crop futures took another hard pounding today on favourable weather and weaker cash markets.
November canola closed at $493.7, down $11.50.
Soy meal fell the daily limit.
November canola has fallen through most technical support levels and is now below the psychologically important $500 per tonne level. Cash prices for September delivery are less than $11 per bushel.
Soy oil, European rapeseed and Malaysian palm prices are all falling.
The Saskatchewan crop report today said 82 percent of the province’s canola crop is in good to excellent condition. The province is Canada’s largest canola producer. Last year at the same time, the canola crop was rated 75 percent good to excellent.
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The rapeseed harvest has begun in Europe. An excellent crop in Germany is expected to offset problems in France and Britain. Production in eastern Europe is also expected to climb so that over all production will likely meet or exceed last year despite the problems in the western part of the continent.
An industry tour today forecast the U.S. hard red spring wheat crop to yield 44.9 bushels per acre, matching the tour’s 2012 forecast and up 3.7 percent from the tour’s five-year average of 43.3 bu. per acre.
The Wheat Quality Council’s three-day tour of North Dakota, the top spring wheat state, and adjacent areas in Minnesota and South Dakota forecasted durum yield at 41.7 bu. per acre, down from 42.4 last year.
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So with crop prices falling hard this week, is this the darkness before the dawn?
The old crop squeeze, mainly in soybean and corn, that had supported old crop prices, had been bleeding over to limit the weakness in new crop.
But the panic about tight supply before the harvest dissipated this week. U.S. farmers started cleaning out the last supplies from their bins relieving crusher anxiety and there were signs the corn harvest would begin soon in Texas offering the hope of new supply in the not too distant future.
With the expectation of new, much cheaper supply coming, grain users will delay buying as long as possible.
While crop conditions are never perfect everywhere, generally they are pretty good across the U.S. Midwest, Western Canada, Europe and the Black Sea region.
Whereas last year it was one disappointing crop after another as the global harvest moved from South America to the former Soviet Union to the United States, this year there are no serious problems.
Prairie farmers will worry about early frosts, but even if one hits, it is unlikely to drive grain or oilseed prices significantly higher as long as things continue to go well in the much larger corn and soybean crops.
I hope farmers heeded warnings this winter and spring of lower prices ahead and did risk management.
But things can still change. North American spring crops are a long way from the bin yet. With this huge bearish market consensus, there could be lots of volatility if there are weather surprises.
While we are fixated on production now, demand this fall will set the trend of how this crop market develops.
An adage in the grain market is: the solution to low prices is low prices. That is another way of saying cheap grain will trigger increased demand that will support prices.
After the short crops of the past year, buyers will want to rebuild stocks and livestock feeders will likely start to expand production and use more feedgrains. Ethanol plants will be more profitable and will buy more corn to process.
That will put a foundation under this market and we could see a modest rally once harvest is over, as we normally do. But “modest” is the key.
Winnipeg ICE Futures Canada dollars per tonne
Canola Nov 2013 493.70 -11.50 -2.28%
Canola Jan 2014 497.70 -11.30 -2.22%
Canola Mar 2014 501.30 -11.90 -2.32%
Canola May 2014 504.10 -10.80 -2.10%
Canola Jul 2014 507.00 -10.80 -2.09%
Milling Wheat Oct 2013 257.00 -2.00 -0.77%
Milling Wheat Dec 2013 260.00 -2.00 -0.76%
Milling Wheat Mar 2014 267.00 -2.00 -0.74%
Durum Wheat Oct 2013 296.00 unch 0.00%
Durum Wheat Dec 2013 301.00 unch 0.00%
Durum Wheat Mar 2014 311.00 unch 0.00%
Barley Oct 2013 194.00 unch 0.00%
Barley Dec 2013 199.00 unch 0.00%
Barley Mar 2014 199.00 unch 0.00%
American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound
Chicago
Soybeans Aug 2013 1355.25 -37.25 -2.68%
Soybeans Sep 2013 1266.75 -35 -2.69%
Soybeans Nov 2013 1224 -32.75 -2.61%
Soybeans Jan 2014 1229 -32 -2.54%
Soybeans Mar 2014 1230 -29.75 -2.36%
Soybeans May 2014 1226 -28.5 -2.27%
Soybean Meal Aug 2013 447.8 -20 -4.28%
Soybean Meal Sep 2013 397.7 -20 -4.79%
Soybean Meal Oct 2013 369 -16.2 -4.21%
Soybean Oil Aug 2013 43.81 -0.45 -1.02%
Soybean Oil Sep 2013 43.83 -0.38 -0.86%
Soybean Oil Oct 2013 43.82 -0.32 -0.72%
Corn Sep 2013 496 -12.25 -2.41%
Corn Dec 2013 478.75 -1.5 -0.31%
Corn Mar 2014 491.25 -1.5 -0.30%
Corn May 2014 499.25 -1.5 -0.30%
Corn Jul 2014 505.5 -1.5 -0.30%
Oats Sep 2013 338 -7.75 -2.24%
Oats Dec 2013 327 -8 -2.39%
Oats Mar 2014 333 -7.75 -2.27%
Oats May 2014 333.75 -7.25 -2.13%
Oats Jul 2014 338.75 -11.75 -3.35%
Wheat Sep 2013 649.25 -4 -0.61%
Wheat Dec 2013 660.75 -3.25 -0.49%
Wheat Mar 2014 671.75 -2 -0.30%
Wheat May 2014 678.25 -1.25 -0.18%
Minneapolis
Spring Wheat Sep 2013 737.75 -5.75 -0.77%
Spring Wheat Dec 2013 749 -4.25 -0.56%
Spring Wheat Mar 2014 761.5 -4.5 -0.59%
Spring Wheat May 2014 768.25 -5.25 -0.68%
Spring Wheat Jul 2014 774.75 -5.25 -0.67%
Kansas City
KCBT Red Wheat Sep 2013 692.25 -5 -0.72%
KCBT Red Wheat Dec 2013 702 -4.25 -0.60%
KCBT Red Wheat Mar 2014 710.5 -4.5 -0.63%
KCBT Red Wheat May 2014 713.5 -4.5 -0.63%
KCBT Red Wheat Jul 2014 701.25 -9 -1.27%
Light crude oil nearby futures in New York rose 10 cents at $105.49 US per barrel.
The Canadian dollar at noon was 97.25 cents US, up from 97.11 cents the previous trading day. The U.S. dollar at noon was $1.0283 Cdn.
The Toronto Stock Exchange’s S&P/TSX composite index fell 3.16 points, or 0.02 percent, to close at 12,669.14.
The Dow Jones industrial average rose 13.37 points, or 0.09 percent, to end at 15,555.61.
The Standard & Poor’s 500 Index added 4.31 points, or 0.26 percent, to finish at 1,690.25.
The Nasdaq Composite Index climbed 25.59 points, or 0.71 percent, to close at 3,605.19.
