Canola falls on slow demand, global economic worries

Canola fell on Thursday on weak domestic and export demand, weak soybean oil and a stronger loonie.

July canola closed at $596.20, down $9.50.

November closed at $554.50, down $13.20.

The Western Canada forecast has a lot of rain showers in the coming days with a wet Friday and Sunday in store for large areas. Monday and Tuesday could also have rain.

However, Saskatchewan’s crop seeding is 96 percent complete and is mostly in good-to-excellent shape expect in pockets with excess moisture and flooding, according to today’s provincial crop report.

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The forecast for the U.S. Midwest has changed again toward hotter, drier conditions and that lifted corn and helped to limit losses in soybeans.

However macroeconomic issues such as the euro zone debt crisis, Greek election on Sunday and slowing growth in China weighed on soybeans. Traders have a near record net long position in soybeans and the crop is at risk of drops when there is long liquidation.

On the other hand, weekly U.S. soybean exports were strong and so was monthly soybean crush data.

• Wheat rose on strong weekly U.S. exports.

China bought 110,000 tonnes of U.S. soft red winter wheat in the largest one time purchase of that wheat class in 8.5 years.

• After shrinking its European crop forecasts for the past two months, Strategie Grains today increased its outlook for soft wheat production by 1.5 million tonnes to 124.2 million tonnes. That would still be down four percent on last year’s 128.8 million tonne crop.

It said recent good weather has supported yields.

It increased the barley outlook by 500,000 tonnes to 53.2 million tonnes, now up three percent on last year’s 51.6 million tonnes.

The corn crop was pegged at 66 million tonnes, up 400,000 tonnes from last month and now almost equal to 66.2 million tonnes in 2011.

It raised the durum crop by 300,000 tonnes to 7.9 million tonnes, citing reports of good quality from initial harvesting in Spain and southern Italy.

• China’s northeastern provinces, where corn and soybeans are grown, have received rain. It was dry there. Dry pockets remain.

• It has turned hot in Russia and Ukraine and crops are stressed. But rain is in the forecast for early next week.

• U.S. stock markets are up. A weekly report on jobs was worse than expected leading traders to believe the employment problem will force the U.S. Federal Reserve to begin another round of economic stimulation.

There is also hope that the conservative party will win the Greek vote on Sunday. Opinion polls can’t be published in the two weeks before the vote but there are rumours that the conservative New Democracy party will win. It supports staying in the euro zone.

Winnipeg (per tonne)

Canola Jul 12 $596.20, down $9.50 -1.57%

Canola Nov 12 $554.50, down $13.20 -2.33%

Canola Jan 13 $558.50, down $13.50 -2.36%

Canola Mar 13 $562.10, down $13.70 -2.38%

The best basis the previous day in the par region was $14 over the July contract, said ICE Futures Canada.

The 14-day relative strength index for the July contract was 38.

Western Barley Jul 12 $237.00, unchanged

Western Barley Oct 12 $210.00, unchanged

Milling Wheat Oct 12 $252.70, unchanged

Milling Wheat Dec 12 $260.00, unchanged

Milling Wheat Mar 13 $269.00, unchanged