Canola and other crop futures fall as wider market swoons

Grain markets swam against a “risk off” day in the wider markets, with traders reacting negatively to the U.S. Federal Reserve’s modest stimulus announcement Wednesday.

Grains stood up fairly well as worries about the economy caused traders to slam down oil and stock prices.

July canola closed at $620.70, down $4.20.

November closed at $576.70, down $7.00

The weather forecast has turned drier and warmer in much of Western Canada and that should help spur crop development.

Soybeans and corn are down, although hot, dry weather in the U.S. Midwest continues to limit losses.

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Wheat closed lower after being higher in the morning on concerns that hot weather in the Black Sea region is reducing yield potential. Ukraine is beginning its winter crop harvest.

A French trader told Reuters that the Ukrainian barley harvest is early and yields are bad.

Although Ukraine’s winter wheat and barley crop will be down, it has large carry over stocks that will allow it to continue exporting.

• Private analyst Cropcast lowered its estimated U.S. corn yield per acre to 158.6 bushels per acre, down from its previous estimate of 163.7.

USDA’s estimate is 166 bu. per acre. Cropcasts sees the corn crop at 13.971 billion bu., down from USDA’s current forecast for 14.790 billion bu.

• The U.S. Fed said Wednesday it would extend Operation Twist to the end of the year. It is designed to pressure interest rates lower and provide a little stimulus to the economy, but its effect is marginal. Many in the markets had hoped for a third round of quantitative easing, a more robust stimulus measure.

There was also data showing Chinese, European and U.S. manufacturing in June was weaker than expected.

• Jeff Kennedy, chief commodity analyst at Elliott Wave International, said Wednesday that crude oil will test the $38 per barrel low set in late 208 and then pause before falling another 50 percent. He also believes the U.S. dollar will continue to rise. Elliot Wave analysis is strictly technical. If this plays out, it would be hard for grain prices to remain where they are because of the connection between oil and corn and soybeans.

• The CWB says it now has handling agreements with Viterra, Mission Terminal, West Central Road and Rail, Delmar Commodities, Linear Grain and Agro Source. These companies join Cargill and South West Terminal, which reached agreements with CWB earlier this year.

CWB programs, including pooling, are available for sign up now. CWB programs are now available for farmer sign-up. Ian White, CWB president and chief executive said interested producers should sign their CWB contracts as early as possible if they want guaranteed access into the pools, which may have limited space – allocated on a first-come, first-served basis.

Winnipeg (per tonne)

Canola Jul 12 $620.70, down $4.20 -0.67%

Canola Nov 12 $576.70, down $7.00 -1.20%

Canola Jan 13 $579.50, down $7.50 -1.28%

Canola Mar 13 581.70, down $8.10 -1.37%

The best basis the previous day in the par area was $14 above the July contract, according to ICE Futures Canada.

The 14-day relative strength index was 57.

Western Barley Jul 12 $237.00, unchanged

Western Barley Oct 12 $208.00, unchanged

Milling Wheat Oct 12 $252.70, unchanged

Milling Wheat Dec 12 $260.00, unchanged

Milling Wheat Mar 13 $269.00, unchanged