Canola lags behind soybean comeback

The soybean markets bounced off some new contract lows to stage an impressive comeback Monday, but canola lagged behind, unable to keep up.

It was as if the market first sold off in response to the Argentine election results, then bought on the news, assuming all the negatives had already been factored in to prices.

The rebound from the new lows was impressive and could provoke or already be part of a short-covering rally. There will be little fundamental news to support higher soybean prices.

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“Fundamentally, the situation in the beans is so nasty that it’s hard to get too excited, other than it might trigger a short-covering rally,” said broker Ken Ball of P.I. Financial.

The world is awash in soybeans and vegetable oil crops and the Argentine election results don’t help. The new president, Mauricio Macri, is expected to soften Argentina’s punitive and production-penalizing taxes and regulations that have both held back production and encouraged farmers to store massive amounts of physical soybeans as both a hedge against inflation and a tax avoidance.

Former Argentine president Cristina Fernandez de Kirchner’s chosen successor was likely to continue her and her deceased husband Nestor’s economically disastrous but popular policies of penalizing business investors and favouring wage-earners, so his defeat supports the notion that Argentine farmers will now both sell more stored soybeans and grow more in coming years.

However, there was nothing new about the likelihood that Macri would win, so the result was already factored in to prices.

World veg oil prices weakened, including palm and European canola.

Winnipeg canola fell to a two-and-a-half month low, exhibiting more of the recent weakness that has bled away most of its expensive-feeling relationship with soybeans.

“Canola was quite weak last week,” said Ball.

“Canola has gone from looking expensive to looking a little more attractive to buyers.”

There were some rains in Brazil over the weekend.

Commodities are very weak presently, with bellwether industrial metal copper lagging at multi-year lows. This weighs on the crops complex since it is hard for any commodity class to avoid the overall downward momentum.

Light crude oil nearby futures in New York were down 15 cents to US$41.75 per barrel.

The Canadian dollar at noon was US74.87cents, down from 74.97 cents the previous trading day. The U.S. dollar at noon was C$1.3357.

Winnipeg ICE Futures Canada dollars per tonne
Canola Jan 2016   460.90   -3.50   -0.75%
Canola Mar 2016   467.70   -3.00   -0.64%
Canola May 2016   472.60   -3.10   -0.65%
Canola Jul 2016   477.10   -3.30   -0.69%
Canola Nov 2016   471.30   -2.50   -0.53%

Milling Wheat Dec 2015   238.00   +2.00   +0.85%
Milling Wheat Mar 2016   240.00   +2.00   +0.84%
Milling Wheat May 2016   244.00   +2.00   +0.83%

Durum Wheat Dec 2015   320.00   unch   0.00%
Durum Wheat Mar 2016   325.00   unch   0.00%
Durum Wheat May 2016   335.00   unch   0.00%

Barley Dec 2015   188.50   unch   0.00%
Barley Mar 2016   190.50   unch   0.00%
Barley May 2016   195.50   unch   0.00%

American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound

Chicago
Soybeans Jan 2016   864.25   +6.75   +0.79%
Soybeans Mar 2016   866.25   +5.75   +0.67%
Soybeans May 2016   872.75   +6   +0.69%
Soybeans Jul 2016   878.5   +6   +0.69%
Soybeans Aug 2016   880.25   +6   +0.69%
Soybeans Sep 2016   880.75   +6.25   +0.71%

Soybean Meal Dec 2015   285.3   +2.3   +0.81%
Soybean Meal Jan 2016   285.9   +2.9   +1.02%
Soybean Meal Mar 2016   286.9   +3.3   +1.16%

Soybean Oil Dec 2015 27.91 +0.01 +0.04%

Soybean Oil Jan 2016 28.19 +0.01 +0.04%
Soybean Oil Mar 2016 28.43 unch 0.00%

Corn Dec 2015   367.25   +4   +1.10%
Corn Mar 2016   373   +3.25   +0.88%
Corn May 2016   378.5   +3   +0.80%
Corn Jul 2016   383.5   +2.75   +0.72%
Corn Sep 2016   387.25   +3   +0.78%

Oats Dec 2015   243.75   -7.25   -2.89%
Oats Mar 2016   227.5   -4.75   -2.05%
Oats May 2016   226.5   -3.25   -1.41%
Oats Jul 2016   227.25   -4.25   -1.84%
Oats Sep 2016   231.25   -3.75   -1.60%

Wheat Dec 2015   495   +6.5   +1.33%
Wheat Mar 2016   497.75   +7.75   +1.58%
Wheat May 2016   501.5   +8.75   +1.78%
Wheat Jul 2016   505.25   +10.25   +2.07%
Wheat Sep 2016   513.75   +10.5   +2.09%

Minneapolis
Spring Wheat Dec 2015   516.5   +7   +1.37%
Spring Wheat Mar 2016   515.25   +6.5   +1.28%
Spring Wheat May 2016   523.5   +5.75   +1.11%
Spring Wheat Jul 2016   533   +6   +1.14%
Spring Wheat Sep 2016   543   +5.25   +0.98%

Kansas City
Hard Red Wheat Dec 2015   464.5   +7.5   +1.64%
Hard Red Wheat Mar 2016   478   +7.5   +1.59%
Hard Red Wheat May 2016   488.75   +7.75   +1.61%
Hard Red Wheat Jul 2016   499.25   +7.75   +1.58%
Hard Red Wheat Sep 2016   513.25   +7.75   +1.53%

Contact ed.white@producer.com