Canola falls on profit taking, weaker crush margins

Canola futures fell for the first time in weeks, pressured by oversold technicals, declining crush margins and profit taking.

Losses were limited by indications that China will allow more of its crushers to take Canadian canola in the second half of this year.

Most traded May closed at $571.40 per tonne, down $4.10.

March, which is in delivery mode, rose 90 cents to $578.90.

November closed at $536.10, down $2.70

The strong loonie also weighed on canola futures.

Soybeans rose on continuing support from a drought reduced Southern American crop and ideas that China will increase its purchases.

• Traders say that China will allow crushers in the interior of the country to crush Canadian canola later this year. Since 2009 China has restricted canola imports because of concerns about the fungus disease backleg. In the first year the restrictions greatly reduced the amount of Canadian canola seed it imported. Last year it increased the number of port crushers that can take Canadian canola and their capacity is enough to cover the quantity Canada can ship this year.

Exports of seed to China so far this year are running at twice the pace of last year.

• Minneapolis wheat climbed on news that Iran had made a major purchase of U.S. wheat, 120,000 tonnes. It was a surprise because of tensions between the two countries over Iran’s nuclear program. The U.S. and Europe have sanctions on Iran, limiting its access to U.S. dollars needed for international transactions like buying food. Iran recently did a barter deal with Pakistan, trading iron ore and fertilizer for a million tonnes of wheat. Iran also recently bought German, Canadian Brazilian and Australian wheat for deliver in this quarter.

• The CWB has announced its first handling agreement with an elevator company. It will partner with Cargill, who will provide access to its country and port elevators. The CWB continues to negotiate with other grain handlers.

Cargill’s port capacity is larger than its country handling capacity so that might have contributed to its eagerness to get an agreement with the new CWB.

• India’s rapeseed-mustard crop is likely to drop by nine percent due to a 10 percent drop seeded area.

According to a survey carried out by the Solvent Extractors Association of India, rapeseed/mustard production is projected to be 6.265 million tonnes against 6.85 million last year.

The yield is expected to be slightly higher this year at about 17 bushels an acre against 16.86 bu. per acre last year, partly offsetting the acreage reduction.

Total oilseed production in India is forecast at 30.52 million tonnes, down from 32.47 million last year, raising the prospect that it will have to import more vegetable oil, likely palm oil.

Winnipeg (per tonne)

Canola Mar 12 $578.90, up $0.90 (+0.16%)

Canola May 12 $571.40, down $4.10 (-0.71%)

Canola Jul 12 $571.30, down $3.80 (-0.66%)

Canola Nov 12 $536.10, down $2.70 (-0.50%)

The previous trading day’s best basis in the par region was $2.00 per tonne off the March contract, said the ICE Futures Canada exchange in Winnipeg. Several crushing plants have positive basis.

The 14-day relative strength index was 83.

Western Barley Mar 12 $214.00, unchanged

Western Barley May 12 $220.00, up $2.00 (+0.92%)

Milling Wht Oct 12 $260.50, unchanged

Milling Wht Dec 12 $265.50, unchanged

Milling Wht Mar 13 $270.50, unchanged

Durum Wht Oct 12 $265.90, unchanged

Durum Wht Dec 12 $270.40, unchanged

Durum Wht Mar 13 $276.60, unchanged

Barley Oct 12 $185.00, unchanged

Barley Dec 12 $188.50, unchanged

Barley Mar 13 $190.00, unchanged

Chicago (per bushel)

Soybeans Mar 12 $13.1675, up 3.25 cents (+0.25%)

Soybeans May 12 $13.225, up 2.5 (+0.19%)

Soybeans Nov 12 $12.9425, up 5.25 (+0.41%)

Corn Mar 12 $6.5375, down 2.75 (-0.42%)

Corn May 12 $6.54, down 4.0 (-0.61%)

Corn Dec 12 $5.6675, down 1.75 (-0.31%)

Oats Mar 12 $3.2725, down 2.75 (-0.83%)

Oats May 12 $3.0925, down 5.25 (-1.67%)

Oats Dec 12 $3.21, down 6.0 (-1.83%)

Minneapolis (per bushel)

Spring Wht Mar 12 $8.14, up 10.25 cents (+1.28%)

Spring Wht May 12 $8.17, up 6.0 (+0.74%)

Spring Wht Dec 12 $8.025, down 1.0 (+0.12%)

Nearby light crude oil in New York settled at $108.84 a barrel, up $1.77.

The Canadian dollar at noon was at par $1.0153 US, up from $1.0136 the previous trading day. The U.S. dollar at noon was 98.49 cents Cdn.

In an early tally, the Toronto Stock Exchange composite closed up 79.45 points, or 0.63 percent, at 12,723.46 lifted by strong bank profits.

Unofficially, the Dow Jones industrial average gained 28.23 points, or 0.22 percent, to finish at 12,980.30. The Standard & Poor’s 500 Index gained 8.41 points, or 0.62 percent, to close at 1,374.09. The Nasdaq Composite Index rose 22.08 points, or 0.74 percent, to 2,988.97.

U.S. February car sales were strong and the weekly number of people filing for unemployment benefits declined, but the pace of U.S. manufacturing in February cooled and consumer spending was flat.