Trader cautions over canola increase

Canola had a good day Monday, making back some of the territory lost in the recent rout.

But the bounce back doesn’t mean much has really changed, according to one trader.

“It got overdone,” said Ken Ball of P.I. Financial in Winnipeg about the Monday recovery.

Much short-covering was probably involved in Monday’s movements, he thinks, plus spread traders playing in the easy-to-move canola futures market.

“It has very little to do with canola itself. It’s just traders maneuvering their positions,” said Ball.

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Canola rose $4.90 per tonne, or over 10 cents per bushel, to $455.20 on the March contract. The May contract closed at $457.20, also up $4.90 or one percent.

Soybean oil rose 0.72 percent, and soybeans and soybean meal moved little. Corn was almost flat, and wheat rose only weakly with lingering support from concern about dry weather in the U.S. southern Plains.

Corn has been fairly weak and flat all 2016, with large stockpiles and expectations of healthy spring acreage.

Soybeans were supported by investors lightening short positions and with crude oil rising and making the vegetable oil content of soybeans more valuable.

Canola’s heavy oil content also allowed it to gain from the surge in crude. West Texas Intermediate rose over five percent to $37-$41 in nearby contracts.

Good news for the Canadian crop marketing outlook came from reports of heavy rains in India hurting winter wheat, canola and chickpeas. Last year harvest rains did much damage and disruption to Indian crops, helping create the import demand that so many prairie pulse farmers benefitted from this winter.

The impact of these rains and hail is hard to assess today, but substantial damage would likely lead to significant imports.

Light crude oil nearby futures in New York were up $1.98 to US$37.90 per barrel.

The Canadian dollar at noon was US75.18 cents, up from 74.98 cents the previous trading day. The U.S. dollar at noon was C$1.3301.

Winnipeg ICE Futures Canada dollars per tonne
Canola Mar 2016   455.20   +4.90   +1.09%
Canola May 2016   457.20   +4.90   +1.08%
Canola Jul 2016   462.40   +4.90   +1.07%
Canola Nov 2016   470.20   +4.00   +0.86%
Canola Jan 2017   475.00   +4.00   +0.85%

Milling Wheat Mar 2016   225.00   +1.00   +0.45%
Milling Wheat May 2016   228.00   +1.00   +0.44%
Milling Wheat Jul 2016   231.00   +1.00   +0.43%

Durum Wheat Mar 2016   288.00   -6.00   -2.04%
Durum Wheat May 2016   293.00   -6.00   -2.01%
Durum Wheat Jul 2016   281.00   -5.00   -1.75%

Barley Mar 2016   174.00   unch   0.00%

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

Chicago
Soybeans Mar 2016   873.5   +3   +0.34%
Soybeans May 2016   881.75   +3.25   +0.37%
Soybeans Jul 2016   887.25   +2.75   +0.31%
Soybeans Aug 2016   889.5   +2.75   +0.31%
Soybeans Sep 2016   889.5   +2.5   +0.28%
Soybeans Nov 2016   893   +2   +0.22%

Soybean Meal Mar 2016   268.5   +0.8   +0.30%
Soybean Meal May 2016   271.1   +0.2   +0.07%
Soybean Meal Jul 2016   273.6   +0.4   +0.15%

Soybean Oil Mar 2016   30.95   +0.22   +0.72%
Soybean Oil May 2016   31.17   +0.21   +0.68%
Soybean Oil Jul 2016   31.41   +0.22   +0.71%

Corn Mar 2016   355   +0.5   +0.14%
Corn May 2016   359   +0.75   +0.21%
Corn Jul 2016   364.75   +1.25   +0.34%
Corn Sep 2016   370.5   +1   +0.27%
Corn Dec 2016   379.5   +1.5   +0.40%

Oats Mar 2016   176.25   +6   +3.52%
Oats May 2016   187.75   +6   +3.30%
Oats Jul 2016   197.75   +5.5   +2.86%
Oats Sep 2016   203.25   +4.25   +2.14%
Oats Dec 2016   212.75   +4.25   +2.04%

Wheat Mar 2016   457.75   +3   +0.66%
Wheat May 2016   462.75   +2   +0.43%
Wheat Jul 2016   469   +2.25   +0.48%
Wheat Sep 2016   478.75   +2.5   +0.52%
Wheat Dec 2016   493.25   +2   +0.41%

Minneapolis
Spring Wheat Mar 2016   506   +3.25   +0.65%
Spring Wheat May 2016   500.75   +3   +0.60%
Spring Wheat Jul 2016   508.75   +3.25   +0.64%
Spring Wheat Sep 2016   518.5   +3.75   +0.73%
Spring Wheat Dec 2016   533.25   +2.75   +0.52%

Kansas City
Hard Red Wheat Mar 2016   459.75   +2   +0.44%
Hard Red Wheat May 2016   470.75   +2   +0.43%
Hard Red Wheat Jul 2016   480.25   +2.25   +0.47%
Hard Red Wheat Sep 2016   493.5   +2   +0.41%
Hard Red Wheat Dec 2016   513.5   +2.75   +0.54%

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