Canola edges higher as markets consolidate after recent falls

Early modest strength in canola faded a litte late in the trading day, but January canola still finished Wednesday up $3 at $457.90.

Earlier in the day the contract climbed as high as $458.80 supported by early gains in soybeans and soy oil.

Canola had been hammered lower over the three previous days, weighed down by StatsCan’s confirmation of a huge 18 million tonnes crop, a rash of farmer selling and speculator selling as technical support levels were broken.

Adding to the pain, the basis has widened by about $7 per tonne since the Statistics Canada report last week.

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However, modest support should start to build from improving crush margins that should encourage increased demand.

Soybeans, the oilseed price leader, are stuck between two trends. Domestic and export demand for American soybeans and soy meal is excellent but a record large acreage of South American soybeans is enjoying mostly favourable growing weather. Once South American harvesters start to roll in February, more pressue will develop.

Palm oil is also caught between two trends. Heavy monsoon rains in Malaysia are causing flooding and making transport difficult. However, exports have slowed. November exports of Malaysian palm oil were down almost nine percent from the month before and there are signs December shipments have slowed more.

Nearby Minneapolis wheat was down a fraction but Chicago and Kansas edged higher on bargain buying.

The wheat market is still depressed by the increase in global year end wheat stocks in the U.S. Department of Agriculture report this week.

Corn was up a little less than one percent today on strong demand from the ethanol sector and bargain buying. Ethanol production last week rose 3.4 percent to 944,000 barrels.

China rejected more loads of U.S. corn because it found an unapproved genetically modified corn variety in the shipment.

The International Grains Council in a five-year outlook report released today thinks production of corn, wheat and barley will edge down slightly next year, falling to 1.935 billion tonnes from 1.94 billion this year. Corn production will fall the most and barley will also be down but wheat could rise 0.4 percent.

The overall decline is expected to be the result of yields falling back to more normal levels. Acreage is expected to edge higher

The IGC sees soybean production climbing to 288 million tonnes, up from 282 this year.

Total grain stockpiles are seen rising marginally through to 2016-17 but are then expected to fall slightly over the subsequent two years.

The untraded December ICE milling wheat was adjusted $1 a tonne lower and March $4 lower to reflect the recent fall in global wheat markets. ICE durum was lowered $2. ICE barley did not change

Winnipeg ICE Futures Canada dollars per tonne

Canola Jan 2014 457.90 +3.00 +0.66%

Canola Mar 2014 468.40 +3.30 +0.71%

Canola May 2014 478.10 +4.20 +0.89%

Canola Jul 2014 486.10 +4.70 +0.98%

Canola Nov 2014 497.20 +5.10 +1.04%

Milling Wheat Dec 2013 194.00 -1.00 -0.51%

Milling Wheat Mar 2014 204.00 -4.00 -1.92%

Milling Wheat May 2014 213.00 -6.00 -2.74%

Durum Wheat Dec 2013 243.00 -2.00 -0.82%

Durum Wheat Mar 2014 249.00 -2.00 -0.80%

Durum Wheat May 2014 253.00 -2.00 -0.78%

Barley Dec 2013 152.00 unch 0.00%

Barley Mar 2014 154.00 unch 0.00%

Barley May 2014 155.00 unch 0.00%

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

Chicago

Soybeans Jan 2014 1344 +5.75 +0.43%

Soybeans Mar 2014 1328.5 +6.5 +0.49%

Soybeans May 2014 1309.25 +4.75 +0.36%

Soybeans Jul 2014 1296.75 +5.5 +0.43%

Soybeans Aug 2014 1265.75 +6 +0.48%

Soybeans Sep 2014 1207.25 +3.25 +0.27%

Soybean Meal Dec 2013 464.6 +0.5 +0.11%

Soybean Meal Jan 2014 438.9 +0.6 +0.14%

Soybean Meal Mar 2014 428.3 +1.7 +0.40%

Soybean Oil Dec 2013 40.2 +0.29 +0.73%

Soybean Oil Jan 2014 40.4 +0.29 +0.72%

Soybean Oil Mar 2014 40.79 +0.29 +0.72%

Corn Dec 2013 431.25 +3.75 +0.88%

Corn Mar 2014 439.25 +3.25 +0.75%

Corn May 2014 447.75 +3.25 +0.73%

Corn Jul 2014 454.5 +2.75 +0.61%

Corn Sep 2014 460.5 +2.5 +0.55%

Oats Dec 2013 379.75 +3.75 +1.00%

Oats Mar 2014 345 +9 +2.68%

Oats May 2014 329 +7 +2.17%

Oats Jul 2014 326.75 +6.5 +2.03%

Oats Sep 2014 327 +6.5 +2.03%

Wheat Dec 2013 630.25 +0.75 +0.12%

Wheat Mar 2014 640.75 +2 +0.31%

Wheat May 2014 646.75 +2.5 +0.39%

Wheat Jul 2014 646.5 +4.25 +0.66%

Wheat Sep 2014 656 +4.5 +0.69%

Minneapolis

Spring Wheat Dec 2013 658.5 -0.25 -0.04%

Spring Wheat Mar 2014 668.5 +0.5 +0.07%

Spring Wheat May 2014 679.5 +0.5 +0.07%

Spring Wheat Jul 2014 687.75 -0.75 -0.11%

Spring Wheat Sep 2014 697.5 +0.5 +0.07%

Kansas City

KCBT Red Wheat Dec 2013 696.5 +2 +0.29%

KCBT Red Wheat Mar 2014 684.75 +0.5 +0.07%

KCBT Red Wheat May 2014 687.75 +1.5 +0.22%

KCBT Red Wheat Jul 2014 683.5 +3 +0.44%

KCBT Red Wheat Sep 2014 693.5 +2.25 +0.33%

Light crude oil nearby futures in New York dropped $1.07 at $97.44 US per barrel.

The Canadian dollar at noon was 94.28 cents US, up from 94.14 cents the previous trading day. The U.S. dollar at noon was $1.0607 Cdn.

The U.S. House of Representatives shocked almost everyone by agreeing on a tw-year budget deal. Reuters reports there is enough support in the House for the plan that it could pass this week and minimize the chances of further government shutdowns at least until October 2015.

The deal set traders thinking that the Federal Reserve is now more likely to wind down its stimulus bond buying. That caused a sell off in U.S. stock markets and also weighed on commodity prices which in turn weighed down the TSX.