Canola closes lower, pressured by U.S. markets

Canola futures were higher in the morning Thursday, but by the close succumbed to negative pressure from lower U.S. grain futures, worries about potentially bearish USDA reports on Friday and lower outside markets.

May canola closed at $603.30 per tonne, down $5.80.

November closed at $556.00, down $4.50.

Prices were up in the morning to 13-month highs thanks to talk of good export demand. Nearby contracts were supported by tight stocks of old crop canola.

• Trade in U.S. crop markets was mostly jockeying in advance of the USDA seeding survey and quarterly stocks reports due early tomorrow morning.

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There was a fair amount of talk today that the reports could have negative surprises for prices.

The average of a Reuters pre-USDA report poll of analysts puts U.S. corn area at 94.72 million acres, the most since 1944, and U.S. quarterly stocks of corn on March 1 at 6.15 billion bushels, the smallest in five years.

• Warm weather in the U.S. Midwest is also weighing on crop prices. That will likely mean an early start to seeding with much better conditions compared to last year.

• Worries about the USDA reports outweighed supportive news about a major sale of corn to China. USDA today confirmed China bought 120,000 tonnes of U.S. corn for shipment by the end of August, the largest in a month. This is likely part of the 360,000 tonnes announced by private sources yesterday.

• The Buenos Aires Grains Exchange today pegged Argentina’s 2011-12 soy crop at 45 million tonnes down from a previous forecast of 46.2 million due to drought. USDA’s last report pegged the crop at 46.5 million tonnes. USDA’s next supply and demand report is expected April 10. Recent local estimates of Brazil’s soy crop are also lower than USDA’s last estimate.

• Wheat was down on good growing weather in the U.S. hard red winter wheat area and expectations of sizable spring wheat seeded acreage. There are no excess moisture problems this year. Also several million acres have been pulled out of the U.S. conservation reserve and will be put into production.

• Weekly U.S. corn and wheat exports were below expectations but that reflects condition a couple of weeks ago before prices fell. The corn sale to China will be in next week’s report.

• Worries that negative publicity about so-called pink slime (beef trimmings treated with ammonium hydroxide) will hurt beef demand pushed U.S. cattle futures down one percent on Thursday to their lowest in 2 ½ months.

ICE wheat prices were revised lower. There was no trade.

Winnipeg (per tonne)

Canola May 12 $603.30, down $5.80 -0.95%

Canola Jul 12 $601.20, down $5.30 -0.87%

Canola Nov 12 $556.00, down $4.50 -0.80%

Canola Jan 13 $560.20, down $4.60 -0.81%

The previous day’s best canola basis was 60 cents over the May contract, according to ICE Futures Canada in Winnipeg.

The 14-day relative strength index was 67.

Western Barley May 12 $229.00, unchanged

Western Barley Jul 12 $232.00, unchanged

Milling Wht Oct 12 $260.50, down $2.00 -0.76%

Milling Wht Dec 12 $265.50, down $2.00 -0.75%

Milling Wht Mar 13 $270.50, down $2.00 -0.73%

Durum Wht Oct 12 $275.00, unchanged

Durum Wht Dec 12 $279.50, unchanged

Durum Wht Mar 13 $286.10, unchanged

Barley Oct 12 $185.00, unchanged

Barley Dec 12 $188.50, unchanged

Barley Mar 13 $190.00, unchanged

Chicago (per bushel)

Soybeans May 12 $13.555, down 12.0 cents -0.88%

Soybeans Jul 12 $13.6125, down 11.75 -0.86%

Soybeans Nov 12 $13.0475, down 15.75 -1.19%

Corn May 12 $6.04, down 16.25 -2.62%

Corn Jul 12 $6.0375, down 15.75 -2.54%

Corn Dec 12 $5.2425, down 12.0 -2.24%

Oats May 12 $3.355, down 6.75 -1.97%

Oats Jul 12 $3.3525, down 2.25 -0.67%

Oats Dec 12 $3.3825, down 3.75 -1.10%

Minneapolis (per bushel)

Spring Wht May 12 $7.8875, down 9.0 cents -1.13%

Spring Wht Jul 12 $7.83, down 9.5 -1.20%

Spring Wht Sep 12 $7.70, down 8.75 -1.12%

Spring Wht Dec 12 $7.7375, down 8.0 -1.02%

The nearby New York light sweet crude contract fell $2.63 to $102.78. The United States, Britain and France are considering using some of their emergency crude oil stockpiles to cut fuel costs.

The Canadian dollar at noon was $1.0001 US, down from $1.0016 the previous trading day. The U.S. dollar at noon was 0.9999 Cdn.

Stock markets reacted to a report that new U.S. claims for jobless benefits fell only slightly last week, missing forecasts for a greater decline.

The Toronto Stock Exchange’s S&P/TSX Unofficially closes down 74.50 points, or 0.60 percent, at 12,339.36.

The Dow Jones industrial average dropped 8.66 points, or 0.07 percent, to 13,117.55. The S&P 500 Index fell 4.24 points, or 0.30 percent, to 1,401.30. The Nasdaq Composite Index lost 10.66 points, or 0.34 percent, to 3,094.30.