Canola futures drop modest despite huge crop

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Published: December 4, 2013

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Screen Shot 2013-12-04 at 7.45.47 AMDespite the huge increase in the latest Statistics Canada canola crop estimate, the oilseed’s futures did not drop much, with losses limited by stronger soybeans and a weaker loonie.

January canola closed down just $2 or 0.41 percent at $480.40 per tonne. It fell as low as $476.70 following the report, which pegged the Canadian canola crop at 17.9 million tonnes, a million tonnes more that the average of trade guesses in a Reuters survey. But then the price rallied back above the $480 mark.

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Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.

The top end of the range of analysts’ estimates was 18 million tonnes, but few believed that this Statistics Canada report would jump to that level. Often, upward revisions are made to crop size at the end of the crop year, once exports, domestic use and year-end stocks are tallied.

Palm oil gains on worries about recent flooding in Malaysia helped support oilseed markets and limited canola’s fall. Soybeans rallied slightly on technical factors.

Wheat futures fell on the larger than expected Canadian crop with December Minneapolis wheat closing down about 1.8 percent.

Statistics Canada pegged the all wheat harvest at 37.53 million tonnes, topping its October estimate of 33 million and the average trade forecast of 33.8 million.

The Statistics Canada report showed crops were generally larger than what analysts expected. The yields were stunningly high, smashing records handily.

Compared to September StatsCan report, the all wheat figure was up 13.6 percent, canola was up 12.5 percent, barley was up 10.7 percent and oats up a huge 21.6 percent.

That weighed down Chicago oats futures despite gains in corn. StatsCan pegged the oats crop at 3.849 million tonnes.

If you have not seen the Statistics Canada numbers already go to the bottom of this report for details.

In other market news —

Corn closed up slightly on bargain buying and short covering after hitting three-month lows early this week.

Reuters reported China has rejected five batches of U.S. corn tainted with a genetically-modified strain not yet approved by its agriculture ministry, a move that could discourage imports amid a growing domestic supply surplus.

Nearly two million tonnes of U.S. corn heading to China face stringent testing now by state quarantine authorities.

The weekly USDA export sales report comes out tomorrow.

Analysts expect the report to show export wheat sales of 450,000 to 550,000 tonnes in the latest week. A week ago, export sales were 562,200 tonnes.

Trade estimates are for 850,000 to 950,000 tonnes of U.S. corn to have been sold during the week ended last Thursday.

 

Winnipeg ICE Futures Canada dollars per tonne

Canola Jan 2014            480.40            -2.00            -0.41%

Canola Mar 2014            490.50            -1.80            -0.37%

Canola May 2014            499.90            -1.50            -0.30%

Canola Jul 2014            507.30            -1.40            -0.28%

Canola Nov 2014            519.10            +2.20            +0.43%

 

Milling Wheat Dec 2013            207.00            -5.00            -2.36%

Milling Wheat Mar 2014            219.00            -4.00            -1.79%

Milling Wheat May 2014            232.00            -3.00            -1.28%

 

Durum Wheat Dec 2013            247.00            unch            0.00%

Durum Wheat Mar 2014            253.00            unch            0.00%

Durum Wheat May 2014            257.00            unch            0.00%

 

Barley Dec 2013            152.00            unch            0.00%

Barley Mar 2014            154.00            unch            0.00%

Barley May 2014            155.00            unch            0.00%

 

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

 

Chicago

Soybeans Jan 2014            1329.5            +9.75            +0.74%

Soybeans Mar 2014            1312.25            +7.75            +0.59%

Soybeans May 2014            1295.75            +8.5            +0.66%

Soybeans Jul 2014            1288            +8.25            +0.64%

Soybeans Aug 2014            1259.75            +6.75            +0.54%

Soybeans Sep 2014            1203            +6.5            +0.54%

 

Soybean Meal Dec 2013            447.9            +1.8            +0.40%

Soybean Meal Jan 2014            430.3            +1.5            +0.35%

Soybean Meal Mar 2014            420.7            +0.9            +0.21%

 

Soybean Oil Dec 2013            40.14            +0.24            +0.60%

Soybean Oil Jan 2014            40.35            +0.24            +0.60%

Soybean Oil Mar 2014            40.75            +0.24            +0.59%

 

Corn Dec 2013            425.5            +3.5            +0.83%

Corn Mar 2014            436.5            +5.25            +1.22%

Corn May 2014            444.5            +5            +1.14%

Corn Jul 2014            451.5            +4.75            +1.06%

Corn Sep 2014            456.5            +4.25            +0.94%

 

Oats Dec 2013            366.5            -1            -0.27%

Oats Mar 2014            326.75            -2.75            -0.83%

Oats May 2014            316.75            -1.75            -0.55%

Oats Jul 2014            316            +0.5            +0.16%

Oats Sep 2014            322.5            +0.5            +0.16%

 

Wheat Dec 2013            647.25            -6.5            -0.99%

Wheat Mar 2014            661.75            -6.5            -0.97%

Wheat May 2014            666.25            -6            -0.89%

Wheat Jul 2014            663.5            -4.75            -0.71%

Wheat Sep 2014            670.75            -4.5            -0.67%

 

Minneapolis

Spring Wheat Dec 2013            672.5            -12.25            -1.79%

Spring Wheat Mar 2014            692.5            -12            -1.70%

Spring Wheat May 2014            700.75            -10.25            -1.44%

Spring Wheat Jul 2014            708.5            -8.5            -1.19%

Spring Wheat Sep 2014            713.75            -6.75            -0.94%

 

Kansas City

KCBT Red Wheat Dec 2013            709.25            -2.5            -0.35%

KCBT Red Wheat Mar 2014            704.25            -7.25            -1.02%

KCBT Red Wheat May 2014            702.75            -6.75            -0.95%

KCBT Red Wheat Jul 2014            695            -5            -0.71%

KCBT Red Wheat Sep 2014            702            -5            -0.71%

 

Light crude oil nearby futures in New York rose $1.16 at $97.20 US per barrel.

The Canadian dollar at noon was 93.49 cents US, down from 93.79 cents the previous trading day. The U.S. dollar at noon was $1.0696 Cdn.

Reuters reported Canada’s main stock index touched its lowest point in six weeks on Wednesday after signs of a strengthening U.S. economy heightened fears that the U.S. Federal Reserve might soon begin scaling back its monetary stimulus program.

Reports on Wednesday showed U.S. private employers topped expectations in adding jobs in November and that sales of new U.S. single-family homes recorded their biggest increase in nearly 33-1/2 years in October.

Also getting attention, the Bank of Canada held its key interest rate steady but noted that the risks of undesirably weak inflation now appear greater than they did six weeks ago, Reuters reported.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 14.95 points, or 0.11 percent, at 13,304.92, after touching 13,234.47, its lowest since Oct. 23.

The Dow Jones industrial average slipped 24.85 points, or 0.16 percent, to end at 15,889.77.

The Standard & Poor’s 500 Index declined 2.34 points, or 0.13 percent, to finish at 1,792.81.

But the Nasdaq Composite Index inched up just 0.80 of a point, or 0.02 percent, to close at 4,038.00.

 

STATISTICS CANADA

Average yields broke records by so much they can scarcely be believed.

Statistics Canada pegged canola production at 17.96 million tonnes, up two million tonnes from 15.963 million predicted in September. The crop is 29.5 percent larger than in 2012.

The average yield was a record 40 bushels per acre, up 42.3 percent from last year, which more than offset a nine percent decline in harvested area.

The previous record yield was 35.3 bu. per acre set in 2009.

Saskatchewan’s average canola yield this year was 37.6 bu. per acre, Alberta was 43.7 bu. per acre and Manitoba 41 bu. per acre.

StatsCan pegged the all wheat crop at 37.53 million tonnes, up from 33.026 in September and up 38 percent from 2012.

The average production estimate of 10 analysts surveyed by Bloomberg News was 33.98 million tonnes.

StatsCan said the average national wheat yield was 53.4 bu. per acre. Spring wheat was 53 bu. per acre, durum 48.4 bu. per acre and winter wheat 70.3 bu. per acre.

The previous record spring wheat yield was 42.8 bu. per acre set in 2011.

Saskatchewan’s spring wheat yield this year was 48.1 bu. per acre. Alberta was 58.7 bu. per acre and Manitoba was 56.2 bu. per acre.

StatsCan put barley at 10.237 million tonnes up 9.247 million in September and up 27.8 million from last year.

The national barley average yield was 71.7 bu. per acre. The previous record was 62.5 bu. per acre set in 2008.

Oats is 3.888 million tonnes, up from 3.163 million tonnes in September and up 38.3 percent from 2012.

Oats area increased 12.5 percent over last year and the yield rose to a record 92.1 bu. per acre. The previous record was 77.8 bu. per acres set in 2009.

Eagerness to sell and transport this huge crop has been frustrated. Even though the country’s two major railways are moving record quantities of crop this fall, they are falling well short of the orders for railcars.

Today’s StatsCan report was based on interviews with 33,400 farmers from Oct. 26 to Nov. 13.

About the author

D'Arce McMillan

Markets editor, Saskatoon newsroom

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