Canola finishes strong, gaining 2.4 percent on the week

Canola futures posted a second week of solid gains as the oilseed picture brightened somewhat.

The March contract expired, so May is now the most traded contract.

May closed at $461.10 up $10.90 a tonne.

New crop November also rose. It closed at $486.70 an increase of $10.30 over the week.

In both cases it was an increase of about two percent.

Investment funds had held large short positions in the canola market over the winter

But the fundamental situation has improved a little, with soybean production problems in South America and strong U.S. soybean exports.

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As prices began to rise, the shorts had to cover their positions and that gave momentum to the market.

Since the rally began on Feb. 10 the May contract has gain 7.6 percent. The question next week is whether the funds will start to shift to a net long position.

However, some analysts suggest that the current oilseed rally might not hold.

A record large U.S. soybean seeded area is expected. Also, as time goes on more South American soybeans will make their way to port, improving access to that record large crop.

Another factor that could turn against soybeans is weakness in China’s economy. Some of the metrics on Chinese exports and other measures of the economy show a slow down. That could slow the growth in China’s soybean imports.

Also China’s poultry flocks are being cut back because of bird flu and its hog production is lagging, reducing the growth in feed demand

And of course here in Canada we are expecting a very large carry over of canola. If we get another year of good yields, the overall supply of new crop canola could be a burden.

We are hoping that if the railways can hit their combined target of 11,000 grain cars a week, the might improve the canola basis.

Wheat posted another strong week.

Chicago, Kansas City and Minneapolis spring wheat all rose.

Minneapolis July wheat closed at $7.27 a bushel, up 22 cents. December closed at $7.33 1/4 , up 19 cents.

The uncertain situation in Ukraine provided support. Ukraine is a major wheat and corn exporter.

While there is a lot of international worry over Russia’s occupation of Crimea and threats of economic sanctions, the agricultural situation is not yet severely disrupted.

The winter wheat crop was seeded last fall and is now breaking dormancy. Seeding of spring crops is proceeding. And there has been no disruption in grain exports so far.

Another factor supporting wheat is concern about the U.S. hard red winter crop.

It faced a severe winter.

It is not clear yet how much damage was done. Also, it is dry in the western parts of the southern plains and that could limit yields if there is no rain in the coming weeks.

On the other hand, wheat is a resilient crop so we can’t too pessimistic at this early stage.

There was a U.S. Department of Agriculture monthly report out early in the week.

It more or less confirmed what the market had been thinking and the lack of fresh bullish news took prices down that day, but then attention turned back to the Ukraine situation and the weather problems in the U.S. and South America.

Corn managed to hold on to its slow, but steady rally, with the May contract gaining five cents on the week to close at $4.86.

I hesitate to talk about the oats futures market because it has no relationship to Prairie cash prices these days, because of the rail transportation issues.

But I should note that before the March oats contract expired today it hit $6 a bushel, a record high. The March contract closed at $5.55 ¼ .

The Canadian Oilseed Processors Association said members crushed 131,095 tonnes of canola in the week ending March 12, a decline of almost seven percent.

That represented a capacity used of 74.5 percent.

ICE Futures Canada, dollars per tonne

Canola May 2014 461.10 +5.00 +1.10%

Canola Jul 2014 470.10 +5.10 +1.10%

Canola Nov 2014 486.70 +4.90 +1.02%

Canola Jan 2015 493.60 +4.90 +1.00%

Canola Mar 2015 500.30 +4.90 +0.99%

Milling Wheat May 2014 222.00 +5.00 +2.30%

Milling Wheat Jul 2014 219.00 +4.00 +1.86%

Milling Wheat Oct 2014 219.00 +4.00 +1.86%

Durum Wheat May 2014 249.00 unch 0.00%

Durum Wheat Jul 2014 250.00 unch 0.00%

Durum Wheat Oct 2014 250.00 unch 0.00%

Barley May 2014 128.50 unch 0.00%

Barley Jul 2014 128.50 unch 0.00%

Barley Oct 2014 128.50 unch 0.00%

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

Chicago

Soybeans May 2014 1388.5 -7.75 -0.56%

Soybeans Jul 2014 1371.75 -6.25 -0.45%

Soybeans Aug 2014 1333.25 -5.75 -0.43%

Soybeans Sep 2014 1232.25 -5.75 -0.46%

Soybeans Nov 2014 1174.5 -5.25 -0.45%

Soybeans Jan 2015 1178.25 -5.25 -0.44%

Soybean Meal May 2014 444 +2.1 +0.48%

Soybean Meal Jul 2014 431.4 +0.9 +0.21%

Soybean Meal Aug 2014 414.8 +0.4 +0.10%

Soybean Oil May 2014 42.29 -0.7 -1.63%

Soybean Oil Jul 2014 42.41 -0.66 -1.53%

Soybean Oil Aug 2014 42.26 -0.58 -1.35%

Corn May 2014 486 +1 +0.21%

Corn Jul 2014 490.5 +1.5 +0.31%

Corn Sep 2014 488.5 +2.5 +0.51%

Corn Dec 2014 487.25 +3.25 +0.67%

Corn Mar 2015 495.25 +4 +0.81%

Oats May 2014 443.75 +3.75 +0.85%

Oats Jul 2014 384.25 -1.5 -0.39%

Oats Sep 2014 338.5 -0.25 -0.07%

Oats Dec 2014 328.5 +5.25 +1.62%

Oats Mar 2015 323 +1.25 +0.39%

Wheat May 2014 687.25 +13.5 +2.00%

Wheat Jul 2014 690.25 +12.25 +1.81%

Wheat Sep 2014 698.25 +11.75 +1.71%

Wheat Dec 2014 707.75 +11.5 +1.65%

Wheat Mar 2015 712.75 +10.75 +1.53%

Minneapolis

Spring Wheat May 2014 734 +13.5 +1.87%

Spring Wheat Jul 2014 727 +11 +1.54%

Spring Wheat Sep 2014 725 +10.25 +1.43%

Spring Wheat Dec 2014 733.25 +10.25 +1.42%

Spring Wheat Mar 2015 738.5 +10 +1.37%

Kansas City

KCBT Red Wheat May 2014 751.5 +14.75 +2.00%

KCBT Red Wheat Jul 2014 745.75 +14.25 +1.95%

KCBT Red Wheat Sep 2014 750.5 +12.75 +1.73%

KCBT Red Wheat Dec 2014 760 +13 +1.74%

KCBT Red Wheat Mar 2015 762.25 +12 +1.60%

Light crude oil nearby futures in New York rose 69 cents at $98.89 US per barrel.

The Bank of Canada noon rate for the loonie was 90.20 cents US, down from 90.44 cents the previous trading day. The U.S. dollar at noon was $1.1087 Cdn.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 17.48 points, or 0.12 percent, at 14,227.66.

The Dow Jones industrial average fell 43.22 points or 0.27 percent, to 16,065.67.

The S&P 500 lost 5.21 points or 0.28 percent, to 1,841.13 .

The Nasdaq Composite dropped 15.023 points or 0.35 percent, to 4,245.396.

For the week, the Dow fell 2.35 percent, the S&P dropped 1.97 percent and the Nasdaq lost 2.1 percent.