Canola falls 3.8 percent on week despite crop problems

Most crop futures fell hard this week as excellent growing conditions in the U.S. Midwest overwhelmed concerns that millions of acres of crops in Western Canada were lost to excess moisture.

The United States Department of Agriculture’s reports issued Friday reinforced assessments that U.S. and world crop supply will increase this year.

Over the week, November soybeans fell 5.2 percent, December corn fell 7.3 percent and December Minneapolis spring wheat fell 6.2 percent.

ICE Futures Canada canola November futures held on better, dropping only 3.8 percent, reflecting the concerns about lost production due to flooding.

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Saskatchewan Agriculture this week said early estimates suggest that between two million to three million acres have been flooded and are unlikely to produce a crop. Doug Chorney, president of Manitoba’s Keystone Agricultural Producers said that unseeded and drowned crops could total as much as 3.5 million acres in that province.

But it is not just flooded crops that at hurting. Large areas in the eastern Prairies are yellowing and stunted due to excess moisture. Crops in the western Prairies are fairing better but there are areas where it is too dry.

The next chance for a good assessment of the size of the Prairie crop is the CWB crop tour July 28-31. The CWB is inviting participants for the three tours, which will start in Calgary, Saskatoon and Winnipeg. Each tour will cover 400 to 500 kilometres a day with eight to 10 field stops per day.

The tours conclude in Regina where the data will be gathered and collated and presented at the conclusion of the event.

The tour will focus on wheat, durum and canola.

With Western Canadian crops in trouble, some might think that crop prices should be climbing. Eventually prices of crops that Canada has a big part of world exports could be supported, crops such as pulses, flax, some special crops and maybe durum.

But when it comes to the major crops, Canada’s problems are more than offset by excellent U.S. and global crops. Today’s USDA reports tell that story and the details are later on in this report.

But first let’s touch on a weather issue that should support pulse crop prices. India’s monsoon posted its fifth straight week of much below normal rainfall.

In the seven days ending July 9 the monsoon rain was 41 percent below average. Since the monsoon began at the start of June the monsoon is 43 percent below normal. The deficit has been greatest in northeast India where most of its oilseed and pulse crops are produced. The forecast is for improved accumulations and coverage next week.

The lack of rain has delayed planting. Pulse seeding is at 1.35 million hectares compared to the normal pace of 2.46 million. Soybean plantings are at 790,000 hectares compared to the norm of 4.4 million acres.

An El Nino would support a dry trend in India. The U.S. weather Climate Prediction Center’s monthly update this week pegged the chance of an El Nino forming during the northern hemisphere summer at 70 percent. The chance increases to 80 percent by the fall and early winter. It said it would likely be have weak to moderate strength during the late fall and early winter and last until spring of 2015.

Turning to the USDA report today, it increased its outlook for global wheat production to about 705.2 million tonnes from 701.6 million. Year end 2014-15 stocks rose to 189.5 million tonnes from 188.6 million in the last report. The 2013-14 ending stocks are 184.29 million.

USDA sees its own wheat crop at 54.21 million tonnes, up as it increased its outlook for the spring wheat crop more than it trimmed its hard red winter wheat estimate.

The USDA’s durum estimate is 59.6 million bushels, down four percent from 2013, but almost spot on the trade expectation of 60 million bu.

USDA decreased the Canadian wheat crop estimate to 28 million tonnes from 28.5 million, but increased the Australian outlook by 500,000 to 26 million.

It raised the European Union crop by more than a million tonnes to 147.88 million.

It lowered Kazakhstan by one million tonnes to 13.5 million but raised Ukraine’s crop by a million to 21 million.

The estimate for Russia’s wheat was static at 53 million tonnes.

USDA left its U.S. corn yield estimate steady at 165.3 bushels per acre but trimmed its harvested acreage forecast to 83.8 million acres, down from 84.3 million in the last report.

That resulted in a production forecast of 13.86 billion bushels, down 75 million bu. from the June report.

However, the drop in production was more than offset by an increase in the estimated carry in, resulting in an increase in year end 2014-15 stocks to 1.801 billion bu., up from 1.726 in June and up from 1.246 at the end of 2013-14.

Growing conditions are excellent in the U.S. Midwest. The USDA will do crop field measurements for its August report and that could result in an increase to the corn and soybean yield estimates.

The USDA lifted its forecast for the U.S. soybean harvest to a record 3.8 billion bu, up 4.5 percent from the June report and up 0.7 percent from the trade’s expectation The crop is now seen as 15.5 percent larger than the 2013 crop.

Winnipeg ICE Futures Canada dollars per tonne

Canola Jul 2014 459.00 -9.50 -2.03%

Canola Nov 2014 439.90 -9.50 -2.11%

Canola Jan 2015 442.80 -9.30 -2.06%

Canola Mar 2015 442.20 -8.90 -1.97%

Canola May 2015 439.00 -10.00 -2.23%

Milling Wheat Jul 2014 186.00 -5.00 -2.62%

Milling Wheat Oct 2014 187.00 -5.00 -2.60%

Milling Wheat Dec 2014 194.00 -4.00 -2.02%

Durum Wheat Jul 2014 239.00 unch 0.00%

Durum Wheat Oct 2014 250.00 unch 0.00%

Durum Wheat Dec 2014 256.00 unch 0.00%

Barley Jul 2014 125.00 unch 0.00%

Barley Oct 2014 132.50 unch 0.00%

Barley Dec 2014 134.50 unch 0.00%

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

Chicago

Soybeans Jul 2014 1295.75 -34 -2.56%

Soybeans Aug 2014 1195.75 -37 -3.00%

Soybeans Sep 2014 1099.25 -22.5 -2.01%

Soybeans Nov 2014 1075 -18 -1.65%

Soybeans Jan 2015 1084 -17.75 -1.61%

Soybeans Mar 2015 1093.25 -17 -1.53%

Soybean Meal Jul 2014 421.8 -12.5 -2.88%

Soybean Meal Aug 2014 387.8 -11.5 -2.88%

Soybean Meal Sep 2014 362.1 -8.5 -2.29%

Soybean Oil Jul 2014 36.71 -0.68 -1.82%

Soybean Oil Aug 2014 36.77 -0.71 -1.89%

Soybean Oil Sep 2014 36.86 -0.69 -1.84%

Corn Jul 2014 399.75 -0.75 -0.19%

Corn Sep 2014 378.25 -8 -2.07%

Corn Dec 2014 384.75 -8 -2.04%

Corn Mar 2015 396 -7.75 -1.92%

Corn May 2015 404.25 -7.5 -1.82%

Oats Jul 2014 348.75 -8 -2.24%

Oats Sep 2014 328.75 -8 -2.38%

Oats Dec 2014 326.5 -4.75 -1.43%

Oats Mar 2015 318.5 -3.5 -1.09%

Oats May 2015 310.75 -5.75 -1.82%

Wheat Jul 2014 514.75 -22 -4.10%

Wheat Sep 2014 526 -22.5 -4.10%

Wheat Dec 2014 547.75 -22.75 -3.99%

Wheat Mar 2015 569.5 -22 -3.72%

Wheat May 2015 585.75 -20.25 -3.34%

Minneapolis

Spring Wheat Jul 2014 737.75 +97.75 +15.27%

Spring Wheat Sep 2014 628 -13 -2.03%

Spring Wheat Dec 2014 640 -12 -1.84%

Spring Wheat Mar 2015 656.75 -9.75 -1.46%

Spring Wheat May 2015 666 -9 -1.33%

Kansas City

KC HRW Wheat Jul 2014 634.25 -21.25 -3.24%

KC HRW Wheat Sep 2014 636.25 -11 -1.70%

KC HRW Wheat Dec 2014 646.75 -11 -1.67%

KC HRW Wheat Mar 2015 653.5 -11.5 -1.73%

KC HRW Wheat May 2015 657.5 -11.75 -1.76%

Light crude oil nearby futures in New York dropped $2.10 at $100.83 US per barrel.

The Canadian dollar at noon was 93.28 cents US, down from 93.83 cents the previous trading day. The U.S. dollar at noon was $1.0720 Cdn.

Canada’s economy unexpectedly shed 9,400 jobs in June and the unemployment rate rose to 7.1 percent from May’s 7.0 percent. Analysts had expected a gain of 20,000 jobs.

In unofficial tallies —

The Toronto Stock Exchange’s S&P/TSX composite index closed up 11.02 points, or 0.07 percent, at 15,125.50.

The Dow Jones industrial average rose 28.74 points or 0.17 percent, to close at 16,943.81.

The S&P 500 gained 2.89 points or 0.15 percent, to finish at 1,967.57.

The Nasdaq Composite added 19.29 points or 0.44 percent, to close at 4,415.49.

For the week, the TSX composite fell 0.6 percent, the Dow fell 0.7 percent, the S&P 500 was down 0.9 percent and the Nasdaq dropped 1.6 percent.