Canola edges higher, wheat rallies on strong demand

Canola futures ended off their highs for the day on Wednesday but still posted a modest increase, supported by stronger soybean and European rapeseed futures.

Any gain in canola is impressive given the expectation of a record-shattering harvest in Western Canada. On Friday we will get the latest Statistics Canada report, based on a farmer survey, on the crop size. Many analysts are talking of a canola crop as large as 16.5 to 17 million tonnes.

Soybeans rose on a technical bounce after recent losses and support from soy meal. European rapeseed futures rose after the European Commission advanced its proposal to impose anti dumping tariffs against biodiesel from Argentina and Indonesia. There is more information on the European move in a Reuters story here.

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The implication is that if less Argentine and Indonesian biodiesel goes into the EU, then European biodiesel users would have to buy from domestic producers, meaning greater demand for European rapeseed. Europe has a good rapeseed crop this year. Also, it imports from Ukraine and Russia and they too had good rapeseed crops. Perhaps more of their seed will stay at home and not be exported to other countries. That might open opportunities for Canadian exports or even present an opportunity for more Canadian canola to go to the EU.

Wheat rose again with Chicago hitting the highest level in 11 weeks. News that Ukraine and Russia are having trouble seeding their winter wheat crops because of excess rain is starting to have a market impact. Current rain problems could mean a smaller Black Sea region harvest next year, reducing its ability to export.

The rain also appears to be affecting current exports of the recently harvested crop from the Black Sea region.

China and Brazil have been major wheat buyers in the past few months and the U.S. is getting a lot of the business. Only four months into the marketing season, U.S. exporters have already sold half of the 29.9 million tonnes of wheat forecast for export this year by the U.S. Department of Agriculture.

The wheat rally is being felt most in the higher protein Kansas City and Minneapolis markets. Kansas City has risen for eight consecutive days.

The partial government shutdown in the U.S. has stopped all USDA daily, weekly and monthly reports on things such as exports and daily cash livestock and grain markets.

A major monthly USDA grain production and demand report is scheduled for Oct. 11 but it will not come out if the budget standoff continues.

Corn fell today, weighed down by the harvest of a record large U.S. crop. Yield results in some areas are proving better than expected.

Private forecaster International FCStone today increased its estimate of the U.S. corn crop to 14.15 billion bushels, up 1.5 percent from its previous forecast. USDA’s last estimate was 13.84 billion bu. but that will be updated Oct. 11 if the USDA is back to work then.

As of Sunday about 12 percent of the U.S. corn crop had been harvested. The new supply is pushing down cash prices. Ethanol makers are taking advantage, increasing their production of the biofuel by five percent last week.

Reuters reported recently that Argentine farmers are slowing the sales of old crop soybeans. They are storing soybeans as a hedge against rising inflation which is running at double digits in the country. The value of the soybeans is expected to hold on better than the value of cash.

Winnipeg ICE Futures Canada dollars per tonne

Canola Nov 2013 477.70 +0.30 +0.06%

Canola Jan 2014 487.10 +0.20 +0.04%

Canola Mar 2014 494.10 +0.40 +0.08%

Canola May 2014 499.90 -0.10 -0.02%

Canola Jul 2014 504.50 -0.80 -0.16%

Milling Wheat Oct 2013 241.00 +4.00 +1.69%

Milling Wheat Dec 2013 243.00 +3.00 +1.25%

Milling Wheat Mar 2014 247.00 +2.00 +0.82%

Durum Wheat Oct 2013 243.00 unch 0.00%

Durum Wheat Dec 2013 247.00 unch 0.00%

Durum Wheat Mar 2014 253.00 unch 0.00%

Barley Oct 2013 149.00 unch 0.00%

Barley Dec 2013 152.00 unch 0.00%

Barley Mar 2014 154.00 unch 0.00%

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

Chicago

Soybeans Nov 2013 1273.75 +5.75 +0.45%

Soybeans Jan 2014 1275.75 +5.75 +0.45%

Soybeans Mar 2014 1257.5 +4.5 +0.36%

Soybeans May 2014 1239 +5.25 +0.43%

Soybeans Jul 2014 1234 +5 +0.41%

Soybeans Aug 2014 1223.75 +4.75 +0.39%

Soybean Meal Oct 2013 417.6 +9.1 +2.23%

Soybean Meal Dec 2013 411.7 +8.4 +2.08%

Soybean Meal Jan 2014 408.3 +7.4 +1.85%

Soybean Oil Oct 2013 39.12 -0.89 -2.22%

Soybean Oil Dec 2013 39.38 -0.89 -2.21%

Soybean Oil Jan 2014 39.71 -0.86 -2.12%

Corn Dec 2013 439 unch 0.00%

Corn Mar 2014 451.75 unch 0.00%

Corn May 2014 459.75 unch 0.00%

Corn Jul 2014 467 +0.5 +0.11%

Corn Sep 2014 472.5 +0.25 +0.05%

Oats Dec 2013 313.75 -1.25 -0.40%

Oats Mar 2014 305.25 +2.75 +0.91%

Oats May 2014 304.75 +3 +0.99%

Oats Jul 2014 299.5 +3 +1.01%

Oats Sep 2014 304.5 +3 +1.00%

Wheat Dec 2013 686 +4.75 +0.70%

Wheat Mar 2014 693.75 +4.25 +0.62%

Wheat May 2014 696 +3.5 +0.51%

Wheat Jul 2014 681.75 +6 +0.89%

Wheat Sep 2014 687 +6 +0.88%

Minneapolis

Spring Wheat Dec 2013 746.75 +10 +1.36%

Spring Wheat Mar 2014 751.5 +7 +0.94%

Spring Wheat May 2014 751.5 +4.5 +0.60%

Spring Wheat Jul 2014 750.25 -0.5 -0.07%

Spring Wheat Sep 2014 748.75 -2.75 -0.37%

Kansas City

KCBT Red Wheat Dec 2013 754.5 +9.5 +1.28%

KCBT Red Wheat Mar 2014 750.25 +7.5 +1.01%

KCBT Red Wheat May 2014 744 +3.5 +0.47%

KCBT Red Wheat Jul 2014 722 +2 +0.28%

KCBT Red Wheat Sep 2014 728.5 +0.75 +0.10%

Light crude oil nearby futures in New York rose $2.06 at $104.10 US per barrel.

The Canadian dollar at noon was 96.79 cents US, up from 96.78 cents the previous trading day. The U.S. dollar at noon was $1.0332 Cdn.

The U.S. buck fell to an eight-month low against the euro following the European Central Bank’s decision to hold to current interest rates. Some had expected the European bank to cut rates.

U.S. stocks fell on Wednesday as the partial U.S. government shutdown entered its second day and worries grew that the problem would not be short lived.

Also data showed private U.S. employers added 166,000 jobs in September, below expectations for 180,000 jobs.

In unofficial tallies —

The Toronto Stock Exchange’s S&P/TSX composite index closed down 8.44 points, or 0.07 percent, at 12,839.

The Dow Jones industrial average dropped 61.71 points, or 0.41 percent, at 15,129.99.

The Standard & Poor’s 500 Index was down 1.35 points, or 0.08 percent, at 1,693.65.

The Nasdaq Composite Index fell 2.96 points, or 0.08 percent, at 3,815.02.