Canola drifts lower on Midwest rain and weaker veg oil prices

After opening higher, canola futures closed down about 1.4 percent Tuesday and soybeans and corn also closed slightly lower.

Spring wheat was also down a little.

November canola closed at $601.80, down $8.50.

Harvest has begun in Western Canada, although rainy weather in northern Saskatchewan and Alberta grain belts delayed work today. Manitoba is reporting highly variable canola yields but said in a crop report issued today that the average yield would be close to the five-year average.

Cooler weather with showers is giving respite to U.S. Midwest farms this week.

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Australia’s wheat production outlook improves as harvest begins

Analysts have raised their estimates for Australia’s wheat harvest, a Reuters poll showed, as better-than-expected yields in western cropping regions boosted the production outlook despite losses caused by dry conditions in parts of the south.

August soybeans surged on short-covering ahead of the contract’s midday expiration. They closed up 23.75 cents at $16.80 a bushel.

November closed at $15.98, down 2.75 cents.

Wheat is under pressure because Egypt bought wheat from Russian and Ukraine today, indicating American wheat is overpriced.

• Agriculture Canada issued a production forecast Monday based on the June Statistics Canada seeded acreage report and trend yields. In general, yields are expected to be down two percent from last year but because seeded area is much larger, overall production is forecast to increase by nine percent.

Strong exports and domestic use should keep 2012-13 ending stocks on the tight side for most crops.

It pegs non-durum wheat production at 22 million tonnes, durum at 4.7 million, barley at 8.55 million and oats at 2.85 million.

For oilseeds it pegs canola production at 15.7 million tonnes and flax at 525,000 tonnes.

In pulse crops, it puts pea production at 3.065 million tonnes and lentils at 1.56 million.

• Vegetable oil prices are under pressure from recent improved palm oil production in Malaysia, coupled with lackluster palm oil demand.

Palm inventory in July reached the highest level since February and palm prices this week reached a 10-month low.

• Australia’s weather bureau said today recent ocean temperature and trade wind trends are consistent with the early stages of an El Nino event. The move toward El Nino stalled in July but appears to have picked up in recent weeks.

Japan’s weather bureau said on Friday that an El Nino pattern was underway.

El Ninos tend to deliver dry weather to the western Pacific, including Australia and Malaysia and wet weather to South America.

Winnipeg (per tonne)

Canola Nov 12 $601.80, down $8.50 -1.39%

Canola Jan 13 $606.80, down $8.10 -1.32%

Canola Mar 13 $608.90, down $6.80 -1.10%

Canola May 13 $606.80, down $5.10 -0.83%

Milling Wheat Oct 12 $292.40, down $2.00 -0.68%

Milling Wheat Dec 12 $298.00, down $2.00 -0.67%

Milling Wheat Mar 13 $308.00, down $2.00 -0.65%

Durum Wheat Oct 12 $299.20, down $2.90 -0.96%

Durum Wheat Dec 12 $303.70, down $2.90 -0.95%