Canola drifts lower despite poor early harvest results

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Published: August 23, 2012

Canola slowly drifted lower and came under hedging pressure late to close down about one percent Thursday while U.S. crop markets were all lower with corn and wheat down by about two percent.

It is hard to sustain record high prices without constant bullish news and the recent results from the ProFarmer Midwest crop tour are only confirming ideas about low U.S. corn and soybean yields, not providing new, even more dire information.

November canola closed at $626.80, down $6.40 or 1.01 percent.

Canola did better than U.S. futures this morning because of the spillover effect from the Statistics Canada report Wednesday that pegged the canola crop at 15.4 million tonnes, a record but about a million tonnes less than the average of analysts’ pre-report guesses.

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Chicago Board of Trade soybean futures hit their highest level in more than a week on Thursday as technical buying helped the market recover from a three-month low reached on Monday, analysts said.

Current market talk is that the canola crop might be even smaller than the StatsCan estimate and oil content from early harvest samples is disappointing.

• FarmLink Marketing Solutions’ weekly crop report said canola is poised to be the biggest disappointment among Prairie crops from a yield perspective.

“Early reports have also shown the oil content to be several percentage points below that of last year, although it’s too early to say whether this will continue to be the case once harvest becomes more widespread,” the report said.

• Commercial and export buying interest also supported canola today.

• Rain is expected to develop on the Alberta-Saskatchewan border Friday and move into central and northern grain belt of Saskatchewan Saturday. Not great for grain quality. However, warm dry weather to follow.

• The CWB announced today it has established a canola marketing pool. The Pool Return Outlook for the pool is $640 per tonne at port.

An initial payment will be announced next month.

Currently there are 42 delivery points for the pool, mostly at smaller independent grain companies, but the CWB expects to announce more locations soon.

• Saskatchewan Agriculture’s weekly crop report said 11 percent of the overall crop is now harvested, up from the five-year average of eight percent for this time of year.

The amount in the bin is: 79 percent of winter wheat, 78 percent of fall rye, four percent of spring wheat, seven percent of durum, six percent of barley, five percent of canola, 22 percent of mustard, 36 percent of lentils and 41 percent of field peas.

In swath or ready to straight combine:  32 percent of canola, 26 percent of mustard, 20 percent of lentils, 15 percent of winter wheat, 21 percent of peas and 12 percent of fall rye.

 

•  Europe’s rapeseed crop now being harvested might be better than expected. German grain trader Toepfer International forecast the crop at 19.64 million tonnes, up from its July estimate of 18.8 million. Last year the crop was 19.05 million tonnes.

• Kansas, northern Oklahoma and western Missouri could get one to two inches of rain or more Friday and Saturday which will be helpful to set things up for winter wheat seeding. Right now the Plains have been suffering the same drought as the Midwest and there have been concerns about seeding wheat into dust.

Winnipeg (per tonne)

Canola Nov 12  $626.80, down $6.40       -1.01%

Canola Jan 13  $630.00, down $7.00       -1.10%

Canola Mar 13  $628.50, down $9.50       -1.49%

Canola May 13  $614.60, down $11.20       -1.79%

Milling Wheat Oct 12  $296.20, down $0.50       -0.17%

Milling Wheat Dec 12  $303.20, down $0.50       -0.16%

Milling Wheat Mar 13  $313.20, down $0.50       -0.16%

Durum Wheat Oct 12  $301.10, unchanged

Durum Wheat Dec 12  $305.60, unchanged

Durum Wheat Mar 13  $312.20, unchanged

Barley Oct 12  $264.50, unchanged

Barley Dec 12  $269.50, unchanged

Barley Mar 13  $272.50, unchanged

Chicago (per bushel)

Soybeans (P) Sep 12  $17.2725, down 20.75 cents       -1.19%

Soybeans (P) Nov 12  $17.15, down 12.75       -0.74%

Soybeans (P) Jan 13  $17.06, down 9.0       -0.52%

Soybeans (P) Mar 13  $16.145, down 8.756       -0.54%

Corn (P) Sep 12  $8.0875, down 21.5       -2.59%

Corn (P) Dec 12  $8.1475, down 20.0       -2.40%

Corn (P) Mar 13  $8.1425, down 19.0       -2.28%

Oats (P) Sep 12  $3.875, down 5.5       -1.40%

Oats (P) Dec 12  $3.91, down 4.5       -1.14%

Oats (P) Mar 13  $3.92, down 3.75       -0.95%

Minneapolis (per bushel)

Spring Wheat Sep 12  $9.205, down 21.25 cents       -2.26%

Spring Wheat Dec 12  $9.3425, down 20.75       -2.17%

Spring Wheat Mar 13  $9.4325, down 20.25       -2.10%

Spring Wheat May 13  $9.49, down 20.0       -2.06%

Outside markets stepped back a little as hopes for a new round of stimulus from the U.S. Federal Reserve faded. On Wednesday, minutes from a meeting of the Fed showed it might be ready for another round of stimulus. That lifted shares yesterday, but today a Fed official was on TV saying the minutes from the meeting that was held July 30-Aug. 1 were “a bit stale” and that was interpreted as an effort to temper expectations

The Bank of Canada noon rate for the loonie is $1.0073 US, little changed from $1.0072 the day before.

The U.S. dollar is 99.28 cents Cdn.

Nearby crude oil in New York fell 99 cents to $96.27 per barrel.

In early tallies:

The Toronto Stock Exchange’s S&P/TSX composite index fell 56.48 points, or 0.47 percent, to close at 12,062.51.

The Dow Jones industrial average dropped 115.30 points, or 0.88 percent, to 13,057.46.

The Standard & Poor’s 500 Index lost 11.41 points, or 0.81 percent, to 1,402.08.

The Nasdaq Composite Index fell 20.27 points, or 0.66 percent, to close at 3,053.40.

Follow me on Twitter @darcemcmillan

About the author

D'Arce McMillan

Markets editor, Saskatoon newsroom

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